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Capital Allowances for Hotels, Pubs and Restaurants

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Is your business taking advantage of capital allowances?

It is estimated that over half of all hotel, pub and restaurant businesses in the UK haven't claimed their capital allowance entitlement, which could be worth hundreds of thousands of pounds.

Passion. We love the word. If we had to describe the approach and work of our tax team in a single word then this would be it.

Tax and passion are not often used in the same sentence, particularly when applied to the built environment; but our dedicated team are passionate in their commitment to saving money and maximising the post-tax returns of owners and occupiers of property in the hospitality industry.

We believe in providing a first-class service that specifically suits client needs, reflecting the nature of the property as well as the potential benefits. This passion and focus is why clients continue to use us year-on-year.

Whilst our early involvement allows us to make the biggest different to our clients, we can also add value by analysing historic expenditure and our extensive property experience and benchmarking resources enable us to compile robust capital allowance claims.

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You don’t get to be the hospitality industry’s accountancy firm of choice without being passionate about it.

What We Do

We are able to assist clients in reducing their tax liabilities by identifying qualifying assets within the building which attract tax relief. In some cases, more than half the project expenditure will attract capital allowances, including professional fees.

New Developments

Where a client has constructed or undertaken the construction of a new building or an extension to an existing building we are able to analyse the costs incurred.

Our Team’s experience in valuation and surveying allow us to fully comprehend the construction processes involved and the documentation used to capture the costs, and hence maximise the level of allowances available.

Early involvement in the construction planning phase can offer opportunities for us to proactively manage the tax relief process and often increase the level of allowances available.

Purchase of an existing property

A client may purchase an existing building, either for use in their business or as a commercial investment. In these cases, in order to claim capital allowances, the purchase price must be split down into the components of the building and the land. Our valuation skills allow us to complete this exercise for properties across the breadth of the UK and as far back in time as the legislation allows.

The changes to the rules for claiming capital allowances on second-hand plant and machinery fixtures, brought in by the Finance Act 2012, have a significant impact on property buyers. Whilst property sellers will not suffer directly from the new rules, there will be consequences for all businesses incurring expenditure on fixtures within commercial property and we offer a consultancy service to advise both buyers and sellers on the impact of these changes to them and the allowances within their properties. Timely advice can ensure that allowances remain available to purchasers and subsequent owners, which could otherwise be lost.

Refurbishment, alterations and fit-out works

Expenditure incurred on an existing building can be analysed in a similar way to the cost of a new building or extension by a detailed review of actual invoiced costs. The value of relief available in connection with refurbishments, alterations or fit-out works is generally enhanced by capturing the cost of all incidental expenditure. Whilst the cost of the works may be capitalised, some costs may be

capitalised repairs and attract 100% tax relief in the current year.

Example — Purchase of Existing Restaurant

William and Emma operate a limited liability partnership. They have a growing portfolio of pubs and restaurants and they make an offer of £950,000 for another restaurant that has been trading at a loss for a number of years. No capital allowances have been claimed for the fixtures in the property.

As a condition of purchase, William and Emma insist that a full capital allowances exercise is carried out to investigate the value of the allowances. The vendor agrees and £250,000 of qualifying expenditure is identified and passed onto the partnership by way of an official s198 election.

If William and Emma are paying tax at 45% via the partnership, the allowances are worth £112,500 so 12% of the purchase price. If William and Emma had not spotted the opportunity, and not insisted on the capital allowances exercise, the value would have been lost.

Get In Touch

If you would like further advice on how this service will benefit you, please contact us on 01225 300 490, or come into the office: 14 Queen Square, BA1 2HN.

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