Catax Solutions Ltd

1. What are the commercial implications to my clients if I do nothing?
To safeguard the benefits for purchaser and vendor, in practical terms a “fair value” for the fixtures contained within the property must be agreed at the point of sale.

Client is purchaser
If the Agreement/CPSE is silent on capital allowances your client is foregoing any rights they have to valuable tax relief.

Client is vendor
Failure to establish a fair value for the fixtures within the property prior to sale will result in the forfeit of financial savings for your client and/or the opportunity to use the available allowances to help negotiate the sale price.

2. What are the implications to me as a legal professionalif I do not act on this impending legislation change?
Accusations of negligence are a real possibility as the sums involved can run into hundreds of thousands of pounds and failure to provide the correct advice could potentially result in litigation.

3. What is my role and responsibility as a solicitor in the capitalallowances identification process?
Throughout property transactions your clients will be completing documentation under your supervision and it is your responsibility as the commercial property solicitor to ensure this is completed correctly, specifically Section 32 of the CPSE replies.

Consequently you will need to advise your clients to investigate the capital allowances position of the property prior to sale (as the solicitor acting for the purchasing party, you should advise your clients to check the capital allowances have been investigated by the vendor prior to finalising the transaction to allow them to access the benefit).

4. I have been involved in property transactions for a number of years; can I revisit historic clients to suggest this service?
Whilst only post April 2014 transactions are affected by this legislation it is appropriate for commercial property owners to secure the available allowances now so your clients can enjoy tax relief sooner rather than later. Therefore now is the perfect time to touch base with your historic clients and proactively highlight the availability of these allowances, by doing so you are enabling them to maximise the speed in which their benefit will be received.

5. How long will it take as I don’t want to delay the propertysale process?
Our average turnaround time is 8-12 weeks. Thus it is imperative to advise your clients wishing to dispose of or acquire commercial property to investigate the matter immediately to prevent any disappointment in loss of benefit and/or loss of potential buyer.

6. How will my client benefit from this if they are selling the property?
When the owning entity disposes of their commercial property there is an opportunity to realise the full relief, which can result in a large financial benefit. If the capital allowances are not identified this immediate and significant benefit will be lost forever. Therefore it is imperative solicitors are aware of capital allowances legislation and the impacts.

7. So what do I have to do now?
You need to make sure you fully understand the changes and how this will impact your clients and your procedures during property transactions. When approaching section 19 of the CPSE replies it is imperative you are advising your clients correctly on how to complete them. Contact us today for advice, services and CPD training.