Care home

Why Did Six Forward Get Involved?

The client is a limited company that owns multiple care homes and that has a shareholder interest in other care companies. Working in partnership with the accountant and the client we have helped in claiming capital allowances.

The accountant asked us to review his client’s purchase contract because the vendor had inserted a £1 election into the contract for capital allowances fixtures and fittings. The accountant and client questioned the validity but were both unsure.

How Did We Help?

All too often, commercial property transactions result in reduced capital allowances claims. Typically, the commercial property standard enquiry replies are poor and there is confusion about capital allowances for fixtures (fixed) and for fixtures and fittings (loose) in the price apportionment. Additionally, fixtures elections (under s. 198 of the Capital Allowances Act 2001) are not prepared correctly in line with capital allowances legislation. By undertaking proper due diligence and establishing the extent of legal entitlement we were able to plug the knowledge gap for the accounting practice and provide certainty to both the accountant and the end client, reducing any perceived risk of making the best possible claim.

What Did We Do?

Acquisition: From a review of accounts and the annual return for the ultimate parent company it was found that the vendor’s ownership was connected within a group structure by transfer; the timing of which resulted in the vendor being unable to claim pre-commencement integral features. There was a contradiction between the proposed contract and the proposed s.198 election. We resolved this by removing from the election the elements that were incorrectly apportioned to special rate pool fixtures.

Refurbishment: A £676,023 refurbishment programme was undertaken to bring the care home back to CQC standard, with upgraded mechanical and electrical installations as well as offices, lifts and stairlifts.

What Was the Outcome?

The outcome was that approximately 43% of the overall project expenditure qualified for capital allowances, 27% as plant and machinery allowances and the balance as structures and buildings allowances.

Relevant Legislation For This Case

Capital Allowances Act 2001 s.11, 15, 33A, 176, 181, 198, 201, 270AA

Contact Us