Compiling an Entitlement to Capital Allowances Report – making a property a more attractive sales prospect

A non-taxpaying entity of an institutional investor had carried out a significant refurbishment of a large office in Central London. Gateley Capitus were engaged to prepare an Entitlement to Capital Allowances Report on the intended sale. 

The entity had carried out a significant refurbishment of the property but as a non-taxpayer did not have entitlement to claim any capital allowances on the expenditure incurred. However, in the hands of a taxpaying buyer the allowances could be very valuable.

How did we help?

First, we reviewed the historical ownership of the property to determine the capital allowances history and ascertain if there were any allowances coming forward to a prospective buyer. We then prepared an analysis of the costs incurred by the seller on the refurbishment of the property to determine the quantum of allowances available to a taxpaying purchaser.

This resulted in us identifying £4,750,000 of plant and machinery allowances that we then presented in a document that was used in the marketing pack for the property.

What you need to know

Entitlement to Capital Allowances Reports are a useful addition to the marketing literature for a property and can be utilised by both non-taxpaying and taxpaying entities. The purpose of the Report is to inform prospective buyers of the potential for tax relief arising from the purchase, streamline the sales process by reducing the number of capital allowances enquiries that the buyer may want to make, and can also yield higher sale prices as an effective tool during negotiation.