IMH Advisory LLP advised a private company on the purchase of an office property for £1.2m.
The vendor confirmed that it had claimed Plant and Machinery Allowances (PMA) and proposed a CAA2001 s198 election for only £1. The vendor had acquired the property in 2006.
Our client had not agreed the capital allowances position in the Heads of Terms, but after an initial discussion, expected the balance of available allowances to be transferred. We estimated the current Tax Written Down Value (TWDV) to be nearer £100,000 and quickly negotiated that this figure would form the basis of the s198 election.
In addition, based on the prevailing legislation in 2006, the vendor could not have claimed the general lighting, general power and cold water systems. Additional integral features of £100,000 were identified, based on a CAA 2001 s562 just and reasonable apportionment of the price paid.
By understanding the legislation and the commercial aspects of this deal, we turned an initial £1 of PMA into circa £200,000, equivalent to circa £40,000 of tax savings.
IMH Advisory LLP advises many property investors from private individuals, non-resident landlords, property companies, funds and REIT’s.