Acquisition of an Industrial Building

Proposition

Our client acquired a large high specification distribution warehouse of over 300,000 sq ft. The property was acquired for £23.8m as an investment with the benefit of an occupational lease in place.

Solution

Tax relief from Industrial Buildings Allowances (IBA’s) had just been phased out and the client realised they required specialist capital allowances advice to maximise the value of the tax relief available.

Initially the legal documents and property reports were reviewed to establish our client’s entitlement to claim capital allowances and estimate the value of the tax relief.

A detailed survey of the property was then undertaken identifying the specification of the property and identifying items of qualifying plant and machinery.

The tenant’s occupational lease and licence to alter the property were reviewed to establish the specification acquired by our client. From this and in conjunction with the information from the survey a detailed reconstruction cost estimate and land valuation was prepared, the figures then used to apportion the purchase price and identify the value of the qualifying plant and machinery.

Result

The total capital allowances claim was £3.15m of which £1.85m was allocated to the General Pool and £1.3m to the Special Pool as Integral Features.

The capital allowances report created a total tax saving of £882,000 being achieved.

Testimonial

“The SG Capital Allowances team acted very promptly in carrying out their survey of our property and then preparing the capital allowances report to incorporate into our tax return. The value of the tax relief exceeded our expectations.”