Funeral directors

Why Did Six Forward Get Involved?

One client, an established funeral director, notified the accountant of their plans to extend their existing premises to provide a new mortuary, additional offices, and a new chapel. The cost of the project was c £1.15m and span two accounting periods.

We were invited to a meeting with the accountant, client, and project management team to obtain further information and determine the best approach in terms of legal entitlement, value maximisation, and acceleration of the relief to aid cashflow.

As part of our engagement, we compiled cost information for works carried out by professional advisers, the main contractor, and sub-contractors for specialist works. Each invoice was analysed to identify elements qualifying for plant and machinery allowances (PMAs), allocated between main and special rate pools, and elements eligible for Structures and Buildings Allowance (SBA). Although PMAs may be written down more quickly at 18% or 6%, or even at 100% where annual investment allowances (AIAs) are available, SBA attracts a lesser rate of relief at 3% per annum.

Having traded for many years, we advised that there was no need to wait until the project completed (a common misconception) to start claiming capital allowances. To expedite the tax relief and help cashflow for the continuing works and broader business, we prepared reports to reflect the capital allowances available in each accounting period. Our client could now utilise cash reserves, otherwise earmarked to pay tax liabilities, to fund this and other projects aimed at growing the business.

Working closely with the accountant, we prepared reports that would reconcile to financial statements ahead of filing deadlines and were able to accurately predict the relief available by applying the rates of write down outlined above.

How Did We Help?

As well as helping to maximise the relief and accelerate write down through our knowledge of the capital allowances legislation, we identified another relief for which our client was entitled to benefit. Land Remediation Relief (LRR) was available in relation to the removal of asbestos and other toxic waste left by a previous owner of the property and offered some relief against an otherwise unexpected additional cost.

Relevant Legislation For This Case

Capital Allowances Act 2001 s.11, 15, 33A & 176

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