Fancy Opening Your Next Store for Free?
01 Nov 2016
Jeremy Chapman, Head of Capital Allowances at PKF Cooper Parry looks at ways of maximising cash flow and reducing costs through an effective property tax strategy
What if I said that opening your next store will cost you nothing? Sounds good, right? Because that’s exactly what one of our retail clients was able to do by saving more than £1m in capital allowances claims.
Capital allowances claims might be something you usually begin to think about when you’re starting a new project or towards the end of your financial year.
But with some planning and foresight, our team often find opportunities where retail businesses could improve their claims even further. And in retail, where cost control is key and margins are tight, maximising your capital allowances claims could make a significant difference.
Start by asking yourself these four questions:
1. How effective have your previous claims been?
Generally, you can claim capital allowances on expenditure incurred at any point in the past provided that the asset is still owned. Lots of the businesses we work with come to us to find opportunities in the present. But once we take a closer look, we find the bigger pay outs come from historic claims.
One client received a repayment of more than £1m – enough to add another store to their portfolio and deliver increased sales at no additional cost – following our review of the historic position.
2. How well do you capture the important information?
Lots of our clients use property professionals when working out their capital allowances. This can be very cost-effective, so long as your property expert uses accurate templates and guidance notes.
We see too many templates that have been adapted over a number of years as legislation has changed but haven’t stayed up to date with current building designs, construction techniques and case law.
We found one business had £8m of under-claimed allowances because their template wasn’t fit for purpose. We helped the client make the claim and then updated their template, which made for less risk going forward and increased capital allowance claims year on year.
3. How tax efficient are your store designs?
Another way to deliver improved claims is to review the tax efficiency of your store designs. This is because many items within a building can be claimed at different rates depending on the energy or water efficiency of the item. But watch out for being too efficient. Some technologies aren’t eligible at the moment, even though they are energy or water efficient.
4. How do you work with HMRC to make things easier?
Working with HMRC doesn’t always have to be time consuming and costly. For capital allowance claims you can agree a fixed percentage claim approach that can be used for a number of years.
This could help with store roll out programmes but you’ll need to keep an eye on it as legislation, design or technology can change. When this happens, it’s important you don’t miss out.
How can we help?
At PKF Cooper Parry we’ve a team of specialists who deal with capital allowance claims. We’ve got lots of experience working with retail businesses, surveyors and HMRC. And we make things simple.
We’ll help if you’re starting new projects, building property or you’re at the start of a fit out process. Or even better at any point in the year to make sure you’re maximising your claims.
To find out more about how we might be able to save you money, get in touch with Jeremy, Head of Capital Allowances, for a chat by emailing firstname.lastname@example.org