Following changes announced in the FA2012, where the previous owner of a commercial property has claimed CAs on fixtures and fittings and Integral Features, the purchaser needs now to ensure that the transfer or sale value of these qualifying items is formally determined.
In the vast majority of cases this will achieved by satisfying the “fixed value requirement” and putting in place a joint election between vendor and purchaser under s198CAA2001.
Whilst this all seems straight forward as the joint election has to be filed with HMRC within 2 years of the property transaction, and unless this is agreed ahead of the purchase contact being signed there can be any number of obstacles that can delay the process.
When completing a joint election there are certain criteria that must be met:
- Identification of what items have been included within the election
- Agreement to the “transfer” value of those qualifying items
Experience has shown that negotiations around these 2 key points is best undertaken before contracts are signed, whilst both parties have an interest in the transaction.
The other benefit for purchasers in obtaining this information ahead of the sale can be to identify further qualifying items that have not been the subject of a previous claim, and providing the vendor pools them ahead of the sale their full value can then be brought in by the purchaser.
At Elect we work with vendors and purchasers to qualify and quantify CA claims, ensuring that maximum relief is available