Solicitors “sitting on sizeable tax rebates”


Tax relief: solicitors under new obligation

Conveyancers will soon be responsible for making commercial clients aware of capital allowances reports and should be careful not to be caught out or risk a negligence action, a tax expert has warned.

New rules come into force in April that will see conveyancing solicitors bear the responsibility for making their clients aware of the need for capital allowances reports during the purchase or sale of commercial property.

Capital allowances are a form of tax relief available to anyone incurring capital expenditure buying, building or making adjustments to commercial property. They are essentially a tax relief on the depreciation of capital assets, which can then be set against profits or income.

Mark Tighe, managing director of Manchester-based capital allowances specialist CA Tax Solutions – which is running CPD training for solicitors on the change – says that i

f, after April, conveyancers fail to make their clients aware of the need for a report that properly resolves the capital allowances position of a property, they could face legal action from either the buyer or seller.

He said: “In nine cases out of 10, capital allowances reports will uncover a tax rebate for the existing owner of a property, which can range from thousands to hundreds of thousands of pounds. Therefore if a conveyancer has failed to ensure the creation of a report logging who can legally claim these benefits, they will invariably be singled out.”

Mr Tighe added that HM Revenue & Customs must be notified of the agreement between buyer and seller within two years of the sale and be provided with all the necessary documentation. If the buyer and seller fail to meet an agreement on who should benefit from what then the Revenue could potentially decide for them — or could even scrap the allowance altogether.

“Unhelpfully, the Revenue has yet to make it clear who will be responsible for ensuring the capital allowances report is produced— the buyer’s solicitor, seller’s solicitor or both. Given that neither party is likely to want to rely on the other’s report, it’s very possible that two reports will be prepared.”

Tags:




Blog


From cost saving to revenue making – post-pandemic commercial success

Commercial success is the driving force for ambitious law firms and it should come as no surprise that many have a renewed determination to re-evaluate their businesses in the wake of Covid-19.


Success in-house – what people don’t tell you about how to get there

TV dramas have made many people think that the legal profession consists of heroes (or villains) in high-flying firms or public prosecution. In reality, nearly a quarter of solicitors work in-house.


The ‘soft landing’ growth strategy for law firms

Increasing demand for ‘hot’ areas of law inspires opportunist law firms to hire more specialists to add to their firepower – the right people at the right time. Yet this is a big ask.


Loading animation