Holiday Lets - Capital Allowances

[jshomesltd]

Has anyone heard of or had any dealings with Hedge Tax Mitigation. They advise that apparently I'm entitled to claim capital allowance on my investment property worked out on the price of the property. Has anyone heard of this because apparently it is a niche and a specilaist area and not many accountants have heard of it according to HTM!.

[section 44]

Capital allowances are available in respect of holiday lets (plant and machinery that are fixtures). A proportion (on a just and reasonable basis) of what you paid for the property is attributable to fixtures at the property. You can claim capital allowances on this amount, subject to being restricted by the historic actual cost of the fixture and the disposal value of the last person to have claimed capital allowances.

HMRC are concerned that there is some "sharp practice" going on in this area.

[jshomesltd]

Thank you section 44 but how would I go about calculating the proportion attributable to the fixtures? Is the CA limited to holiday lets or does it extend to buy to lets as well? I'm tempted to engage the services of HTM who charge a refundable fee of £49.50 to establish whether or not any CA is due and if it is, they will take a maximum cut of 10% of the amount of CA due!

[section 44]

Capital allowances are available in respect of buy-to-let properties except for residential property (other than holiday lets).

Practically, would an adviser be able to ascertain what the original cost of the fixtures was or what the disposal value was for the last person who claimed capital allowances? Perhaps this is why HMRC are concerned?

[AvocadoK]

As section 44 says, it is well nigh impossible to work out the actual cost of the fixtures qualifying for CAs. So in practice, HMRC accept claims based on a formula, which takes the replacement cost of fixtures as a proportion of the replacement cost of the property, and multiplies it by the original cost of the property. So you need a surveyor or a Capital Allowances firm to do the valuations.

HMRC may of course query the claim and the valuations underpinning it. It is essential to understand that they may do this many months after they have repaid the tax and after HTM (or whoever) have taken their fee. Just because HMRC has repaid tax does not mean they have agreed the claim. You should therefore check with HTM about what happens if HMRC claw back some tax at a later date. In my experience, there are capital allowances firms who just don't want to talk about that.

AK

[dunhamsjd]

I have reviewed a number of HTM's "capital allowances reports" & have found them to be lacking in their technical understanding of the subject and they have also included assets that were either not in the property in question or not actually eligible. In addition, it is normal for them to ask the accountant or tax agent for a client to sign off their report which, in my opinion, does nothing more than absolve then from any liability for their report.
I have been a capital allowances specialist for some 17 years and HTM are one of a number of "capital allowances specialists" who have emerged over the last two years or so who are driven by fee income rather than by providing a quality professional service.
I would be happy to discuss this with you and for the record, provide a no-cost initial assessment of the situation.
I can be contacted on 0118 933 2588 or more details can be found at www.dunhamsconsulting.co.uk

[jshomesltd]

Hi dunhamsjd and thank you. When would be the best time to ring you on 0118 933 2588?

[dunhamsjd]

I'm available this evening up to 7pm or tomorrow after 11.30am

[jshomesltd]

Sorry dunhamsjd, only just got onto the forum. I have left a message on your voicemail with contact numbers for myself. I look forward to hearing from you.