With the recent introduction of the new capital allowances fixtures legislation, in particular mandatory pooling, there is now an onus on solicitors to give their clients accurate and timely advice in respect of capital allowances.
Capital Allowances issues are complex and require specialist tax and surveying skills. The general feeling amongst solicitors, therefore, is that the provision of capital allowances advice is outside the scope of their service. Incorrect or sufficient advice however can lead to incorrect or inaccurate wording within purchase contracts which, following the introduction of mandatory pooling, may lead to the loss of all available capital allowances for a property.
The client however is likely to rely on the solicitor for dealing with all the transaction issues including capital allowances and the decision in the case of Hossein Mehjoo v Harben Baker (2013) enforces the solicitors’ obligations in this respect. Unless solicitors obtain the advice of capital allowances specialists, future legal cases which find solicitors to be negligent in this area are likely.
Whilst the Commercial Property Standard Enquiries (C.P.S.E. 1 version 3.3), which have recently been amended to reflect the new fixtures legislation, provide a starting point for the capital allowances due diligence process, it is essential that the solicitor obtains specialist advice on capital allowances. This is highlighted by C.P.S.E. 1 (3.3) where the role of a capital allowances advisor is specifically referred to.
Whether acting for the purchaser or the vendor, HCCA can provide you with a full range of due diligence services and transactional advice to ensure that the purchase contract includes correct and accurate wording which optimises your clients’ tax savings available from capital allowances.
HCCA works in association with a number of professional service firms and is generally happy to form partnering arrangements where appropriate. We harmonise our roles and services with a view to providing a rounded property taxation service whilst maximising capital allowances opportunities and cash benefits for our respective clients. Many of our current professionals see this service as a relationship enhancement with their clients.