Dear All,

As a capital allowances specialist I have been contacted by many owners of HMOs who have been "sales pitched" by some high profile capital allowances claims companies. It would appear that some of these companies are still claiming that capotal allowances figures of circa 25% of the investment costs are achievable on HMOs and many owners are proceeding with claims on this basis.

We believe that under the new guidelines issued in October 2010 by the HMRC the figure is likely to be less than 5% of the investment costs and therefore, in most cases, employing a specialist capital allowances surveyor is unlikely to be economically viable. Only expenditure on HMOs between 29th December 2008 and 21st October 2010 is likely to qualify at the higher levels stated i.e. circa 25%.

Please note if a claim is made the HMRC will automatically pay out any tax rebate but will then have at least 12 moths to launch an enquiry. My advice is not to undertake capital allowances claims based on the promise of high returns as stated above. I thought I would publish on this forum to warn people of the potential pitfalls and dangers of making a capital allowances claim. Believe me if I thought it was legal to do so my company would be doing this type of work.

Thanks John

(26-10-2012 12:03 PM)john_plumridge Wrote:  Dear All,

As a capital allowances specialist I have been contacted by many owners of HMOs who have been "sales pitched" by some high profile capital allowances claims companies. It would appear that some of these companies are still claiming that capotal allowances figures of circa 25% of the investment costs are achievable on HMOs and many owners are proceeding with claims on this basis.

We believe that under the new guidelines issued in October 2010 by the HMRC the figure is likely to be less than 5% of the investment costs and therefore, in most cases, employing a specialist capital allowances surveyor is unlikely to be economically viable. Only expenditure on HMOs between 29th December 2008 and 21st October 2010 is likely to qualify at the higher levels stated i.e. circa 25%.

Please note if a claim is made the HMRC will automatically pay out any tax rebate but will then have at least 12 moths to launch an enquiry. My advice is not to undertake capital allowances claims based on the promise of high returns as stated above. I thought I would publish on this forum to warn people of the potential pitfalls and dangers of making a capital allowances claim. Believe me if I thought it was legal to do so my company would be doing this type of work.

Interesting.

I went to a pin meeting where this was raised. I ran it past my accountant who said do t do it - rules have enough latitude to think you have a large claim but it could trigger an investigation. He said most of the companies operate on the fringes so to speak.

(29-10-2012 10:33 AM)Simon Topple Wrote:  

(26-10-2012 12:03 PM)john_plumridge Wrote:  Dear All,

As a capital allowances specialist I have been contacted by many owners of HMOs who have been "sales pitched" by some high profile capital allowances claims companies. It would appear that some of these companies are still claiming that capotal allowances figures of circa 25% of the investment costs are achievable on HMOs and many owners are proceeding with claims on this basis.

We believe that under the new guidelines issued in October 2010 by the HMRC the figure is likely to be less than 5% of the investment costs and therefore, in most cases, employing a specialist capital allowances surveyor is unlikely to be economically viable. Only expenditure on HMOs between 29th December 2008 and 21st October 2010 is likely to qualify at the higher levels stated i.e. circa 25%.

Please note if a claim is made the HMRC will automatically pay out any tax rebate but will then have at least 12 moths to launch an enquiry. My advice is not to undertake capital allowances claims based on the promise of high returns as stated above. I thought I would publish on this forum to warn people of the potential pitfalls and dangers of making a capital allowances claim. Believe me if I thought it was legal to do so my company would be doing this type of work.

Interesting.

I went to a pin meeting where this was raised. I ran it past my accountant who said do t do it - rules have enough latitude to think you have a large claim but it could trigger an investigation. He said most of the companies operate on the fringes so to speak.

Thanks Simon. I agree there are a few companies who are operating on the fringes and unfortunately they do give the rest a bad name. Your accountant was right to say not to do it.

There are cases when capital allowances may be worth a lot, e.g. the cost of putting in a lift.

However I too fail to see how most HMO owners can recover much on capital allowances without going into a “grey” area at best.

(29-10-2012 01:38 PM)ian2128038772 Wrote:  There are cases when capital allowances may be worth a lot, e.g. the cost of putting in a lift.

However I too fail to see how most HMO owners can recover much on capital allowances without going into a “grey” area at best.

Thanks Ian. Your right there are exceptions where P&M such as a lift is either already present on purchase or is installed.