What Is The Basis Of A Claim?

All commercial property, of whatever age or specification or whether freehold, feuhold or leasehold, may have an element of capital allowances. However, the amount or value of those allowances will vary depending upon the tax history of the property, the type and specification of the property and the acquisition price.
The basis of claim will depend upon whether any previous owner has made a claim for capital allowances and, if they have, when the property was sold and what agreement was reached with the purchaser on that sale.
Where no previous claim has been made or if one was made where that claimant sold the property prior to 24 July 1996, the capital allowances available to the purchaser will based upon the acquisition cost.
When purchasing a property three main elements are acquired, the land, the building or structure and the machinery or plant. These three main elements are normally acquired for a single sum, the purchase price, so it is therefore necessary to apportion the purchase price paid to each of the three elements in accordance with the Inland Revenue’s recognised method of apportionment.
The foregoing has been a brief introduction to the complex subject of capital allowances and property investments. The legislation and precedent case law surrounding capital allowances and property investments is very complex and it has not been possible to identify all of the relevant acts, cases and issues in this article.
There are numerous issues to be considered when addressing the capital allowances on your investment property. It is therefore imperative that expert advice is sought at the earliest possible opportunity to maximise your capital allowances claims.