Tax issues in CAPEX

• The distinction between revenue and capital costs, including the special rules relating to capital expenditure tax relief and deduction;
  • Pre-acquisition dilapidations in capital expenditure tax treatment
  • Replacement of integral plant
• How tax relief varies on different types of plant and machinery, including;
  • Integral plant in buildings
  • Cars and vans
• The conditions to claim Structures and Buildings Allowance, for both the first and subsequent users
• How incidental costs, such as architects’ fees and building alterations, are dealt with
• The tax rules when plants or buildings are bought and sold;
  • Impact on the vendor
  • Impact on the purchaser
  • Transfers within a group

All the basics

• Revenue and capital expenditure distinctions, including:
  • Lease dilapidation provisions
  • Putting the right pre-acquisition dilapidations
• The importance of the distinction between ‘function’ and ‘setting’ in identifying plant and machinery
• The key definitions of buildings, etc. in Capital Allowances Act 2001 (CAA 2001) s. 21-23
• Alterations to buildings and the importance of the Wetherspoons case
• The ‘general’ and ‘special rate’ pools
  • What’s included
  • The tax allowances available
  • Disposals from the pools
  • Long-life and short-life assets
• The Annual Investment Allowance (AIA)
• The Structures and Buildings Allowance (SBA)
  • Qualifying expenditure
  • Allowances available
  • Disposals and allowances for the second user
  • Compliance issues

Further detail and practical scenarios

• The special rules on ‘fixtures’ that are plant, including
  • The importance of an 198 election when selling or buying a building containing fixtures
  • ‘Just and reasonable’ apportionments where an 198 election is not possible
• Date when expenditure is incurred under CAA 2001
  • General rule and the special rules for hire purchase contracts
• Comparison of tax relief on bought plant and leased plant
• The super-deduction of 130% and the 50% FYA
  • Qualifying conditions
  • Special rules on disposals
• Case study: Re-fit of a shop or office
• Residential lets
  • Rules on tax relief for CAPEX and CAPEX management (‘renewals basis’)
  • Contrast with rules for furnished holiday lets
• Other scenarios, including
  • Care homes; caravan sites; greenhouses; polytunnels

The trainer is a Chartered Accountant who qualified with PwC in 1988, spending his last 18 months there in the Corporate Tax department.

In 1989, he joined a leading financial training company as a tax tutor, teaching final-level candidates for the ICAEW and ACCA examinations. Since 1992, he has been self-employed as a Professional Tutor and Training Consultant, specialising in tax update courses for accountants, lawyers and investment managers.

He has been teaching in the financial services industry since 1994. Although he concentrates on the professional development market these days, he is very experienced in teaching stock brokers, fund managers and financial advisors for their various regulatory examinations.

As a result, he is a tax specialist with (unusually) a very rounded knowledge of financial services products and markets. In 2012 this led to him undertaking Gapfill courses for the CISI.

He is a regular contributor to Taxation magazine and speaks at regional conferences of the ICAEW and CIOT.

Until 31 March 2023, companies can claim 130% tax relief on qualifying plant and machinery. Other plant and machinery may be eligible for a first-year allowance (FYA) at a rate of 50%. In contrast, structures and buildings are only eligible for a 3% p.a. writing down allowance.

The issue of ‘What is plant?’ is therefore currently even more important than in the past. Unfortunately, the differences between plant and buildings and between the different categories of plant, are often nuanced, so it is easy to make mistakes.

Claiming all possible tax relief on capital expenditure can make a huge difference to the effective cost to businesses of the work carried out or items purchased. To do this requires a good understanding of both statute and case law.

This Tax issues in CAPEX Training course will aim to give attendees the knowledge to deal with these issues in practice, covering everything from the basic definitions of ‘plant’ to common everyday scenarios where knowledge of capital allowances law can save money. Key case law will be used throughout to enhance this knowledge.

This Tax issues in CAPEX Training course will be suitable for anyone involved in CAPEX projects, whether managing such projects or acting as an advisor.