time limit on capital allowance claim

We have a client we have acquired where we have looked at the 2000/01 comps

The previous accountant wrote the wrong figure into the capital allowances pool, such that additions to the pool were under claimed by £90,000 approx

We asked hmrc to amend under error and mistake and they rightly state we are out of time

I recall being told there is no time limit on brining capital allowance additions into the pool, but I cannot locate guidance any where

Can anyone advise?

Short description: 
is there are claim

Comments

plummy1's picture

This should help.

plummy1 |

There is no time limit to identifying the capital allowances but they can only be pooled in a open tax year. Therefore you probably have to amend the tax returns / computations for the first open tax year onwards.

Regards

John

www.curtisplumstone.com 

Time limit

raychidell |

There is no time limit as long as the assets in question are still owned in the year for which the claim is made. Bear in mind, however, that you will not be able to claim any annual investment allowances or first-year allowances as these are only available where claimed for the year in which the expenditure was incurred (see CAA 2001, s. 51A(2) re AIAs and s. 52(2) re FYAs). AIAs were in any case not available back in 2000/01, of course.

Ray

www.claritaxbooks.com

eastangliantaxadvisor's picture

Can you point me to the

eastangliantaxa... |

Can you point me to the leglsiation that applies, as I need to quote this back to HMRC!!

eastangliantaxadvisor's picture

Another point - do I get FYA

eastangliantaxa... |

Another point - do I get FYA'a based on when the asset was purchased, or just the standard 18% allowance?

Time limit - authority

raychidell |

Hi AP

No FYAs - see my first reply above. So you can only claim WDAs.

As for authority to quote to HMRC, it is a shame that you have to educate the Revenue staff, but that is not unusual in capital allowance matters. There is no specific section that spells it out, as it is given in negative terms, but here you go.

Forget about error or mistake relief - that is not relevant here.

It comes down simply to the definition of "qualifying expenditure" in s. 58 of CAA 2001. As the expenditure has not been brought into the computations previously, it is available as qualifying expenditure in any subsequent period (as long as it is still owned in that period: see s. 58(4)). There is no question of the claim being late - you can incur expenditure in Year 1 and claim it in Year 20 if you wish, as long as it is still owned at that later point. It is not a late claim for Year 1 but an in-time claim for Year 20.

That is it. There is no other section that you can quote and I think I am right in saying that the HMRC manuals do not specifically cover the point. But there is no doubt at all that that is a correct interpretation. If the officer does not accept it, ask him to refer it for a second opinion or take it to a tax Tribunal, which will force the issue.

Ray

plummy1's picture

In support of Ray

plummy1 |

Ray is an expert in the capital allowances field so doesn't really need my support but I have just cut the following from The Capital Allowances Partnerships website written by Steven Bone this just mirrors what Ray has said:-

Current time limits to claim

 

Under the normal self-assessment rules, taxpayers have a, broadly, two-year window to claim capital allowances (ie, a year to file the tax return and a further year to amend it). 

 

However, nothing requires the qualifying expenditure to be added to a capital allowances pool for the chargeable period in which the expenditure was actually incurred. Therefore, taxpayers are free to make late claims by adding the expenditure to a capital allowances pool for any later period, as long as the P&M is still owned in that later period [CAA 2001, s58(4)].  Currently, this provides the flexibility to help taxpayers who did not claim capital allowances as early as they could have. This is a long-standing principle.

 

If Ray and Steven says it is so then it would be a brave tax inspector who tried to argue otherwise!

George Attazder's picture

I agree...

George Attazder |

... that Ray knows his onions!

Under the old (1968?) Capital Allowances Act, I vaguely recall that there was a requirement to notify expenditure within two years, but I think that disappeared when the 1990 Act was passed (now also superseded by the 2001 Act.  I could be wrong.  The memory ain't what it used to be!

Thanks

raychidell |

Not quite sure if modesty requires silence or if manners require thanks. But thank you, anyway, to both Plummy1 and George A for these kind comments. (Steven Bone and I both write on CAs - for our sins - but come at the topic from different angles.)

It would be interesting to know if others have experience of having to teach HMRC staff basic capital allowances points. Many tax staff struggle with the fixtures rules, but I would expect them to know about the issue raised in this query. On the other hand, I have had to bounce a few things off the Head Office specialists and have found them invariably helpful and competent.

Ray

www.claritaxbooks.com

Steven Bone's picture

Thanks also

Steven Bone |

Plummy1 - thank you for the mention.

It is also worth noting that when CAA 2001 was written the Explanatory Notes (Annex 1, Change 8) said "... nothing in clause [that is, now CAA 2001 section] 58 requires a person who would like to claim capital allowances to allocate the expenditure to a pool for the chargeable period in which the expenditure is incured.  The taxpayer is allowed to allocate expenditure to the pool for a later period.  Most taxpayers are likely to want to allocate expenditure to the pool as soon as possible.  But providing the flexibility could for example help a taxpayer who has inadvertently failed to include expenditure for the earliest possible period."

My colleagues and I have also had plenty of experience 'educating' HMRC staff in basic capital allowances matters, but found the Head Office specialists to have a sound grasp of the subject (albeit rarely as 'helpful' a mindset as the taxpayer might like!).

Steven

http://www.cap-allow.com/

Claiming CAs on FHL

batman |

I bought a barn in 2007 and converted it over the next 2 years.  I have FHL losses 2009/10 to 2011/12 and claimed sideways loss relief 2009/10 (I hope to have a profit within a few years time).  I have put through some expenditure as AIA but the bulk of my development costs in 2008/9 (pre-letting) is unclaimed. My questions are:

1. Can I claim CAs in the year 2009/10 and then claim as losses against my other income?

2 How do I calculate the CAs, a specialist CA co. I spoke to would send a valuer to the property to value the CAs, is this an acceptable way?

plummy1's picture

Claiming CAs on FHLs

plummy1 |

Hi Batman,

You will not be able to claim capital allowances in 2009/10 as this tax year is no longer open for amendment. Your 2010/11 tax return remains open for amendment until 31st January 2013.

A professional and capable capital allowances specialist should be able to give you a pre-contract estimate of the likely capital allowances which will be available together with the basis of their fees. I wouldn't go with a company which has a fixed fee rate regardless of the level of capital allowances which may be found.  

Yes a survey may well be necessary although as a company we have undertaken desk top evaluations where the necessary information is available such as floor plans, pictures, evidence of expenditure etc. It depends on the economics of each case.

Regards

John

www.curtisplumstone.com