The issue of “embedded”, or lost, capital allowances (that is fixtures which are integral to a commercial building) has been around for a while, but has now been brought into even sharper focus as a result of this year’s Budget.

From April 2008 these will no longer be treated as “plant” attracting an annual writing down allowance of 25%, but will be reclassified as a form of long life asset with a writing down allowance of 10%. The transitional provisions have yet to be announced, but in the meantime there remains an opportunity for businesses and their advisers to re-visit previous years’ claims to establish whether any “lost” allowances can now be recovered.

Typically, the cost of a building will include between 10% and 30% worth of eligible fixtures, possibly even higher in certain industries. However, identifying these fixtures is not always straightforward and the claim is simply submitted without fully assessing the potential hidden assets.

Industries which are particularly suited to such claims are hotels, nursing homes and medical practices, but office buildings may also contain a significant element of fixed plant. For example, air conditioning systems, central heating systems, emergency lighting and CCTV are just a few examples of expenditure which qualifies for deduction against a business’ trading profits.

The use of a qualified Quantity Surveyor in conjunction with the tax expert is essential to reveal the full extent of the possible claim. As all such work needs to be undertaken on a contingency basis there is nothing to lose for businesses which qualify. A report is produced which forms the basis of the claim to be submitted to H M Revenue and Customs. Any queries which arise can then be swiftly dealt with. Once agreed, these values can also prove to be useful on subsequent sale of the business, an area which is frequently overlooked.

If you would like any further information regarding the above then speak to your advisers or contact Glen Marshall at Landin Wilcock & Co on 0114 2754321.