Conveyancers 'could be sued by buyers and sellers' over capital allowances
Conveyancers face a twin threat from buyers and sellers of commercial properties next year after the government changes the rules on reporting capital allowances.
Conveyancers face a twin threat from buyers and sellers of commercial properties next year after the government changes the rules on reporting capital allowances.
As part of a clampdown on capital allowance claims, HMRC has said that from April 2012 buyers and sellers must 'fix their agreement' about the value of fixtures transferred within two years of the sale.
Capital allowances provide tax relief for the depreciation of capital assets, particularly plant and machinery, and can be deducted from a company's income or profits.
Mark Tighe, managing director of Cheshire-based CA Tax Solutions, said that, if conveyancers did not get a proper capital tax allowance report, they could be sued by both parties.
'Conveyancers will have to get a capital allowances report on every building bought after April 2012,' Tighe said. 'If a buyer can't claim because the figures aren't logged, there will be one hell of a bunfight after the event.'
Tighe said the parties must notify HMRC within two years of the sale that they had agreed a figure and provide supporting evidence. He said that if the parties did not come to an agreement on allowances, either HMRC would do it for them or they could be lost forever.
'Let's hope that lawyers are more pro-active than accountants,' Tighe said. 'At the moment it's not routine to get a report done. Responsibility seems to fall between lawyers and accountants.'
He added that the government had not carried out its threat to impose a two-year time limit on capital allowance claims next year. This would have prevented people claiming where a commercial building was bought before April 2010.