Extensive Refurbishment and Reconfiguration of Hotel

Proposition

Our client had a family owned and operated London hotel which had been within their ownership for some time. The hotel required significant updating throughout the property including bedrooms, circulation areas, bar and restaurant. The total expenditure was circa £3.5m.

Solution

The specialist capital allowances team were appointed early in the project to maximise the overall value and cash flow of the tax relief available.

It was important that the contract documentation was detailed to assist in preparing robust claims for capital allowances. Some of the works were of a repairs and maintenance nature and it was important these works were clearly identified and described as they provide an immediate tax deduction.

Additionally, where the works were involving new services such as air conditioning, by selecting equipment which was energy efficient and was qualifying for Enhanced Capital Allowances further expenditure attracted an immediate tax deduction.

As the works were carried out to an existing property it is also important to ensure all works incidental to installation of the qualifying items were identified to further enhance the claims.

Result

Revenue expenditure for repairs and maintenance works of £470,000 was identified. A further £1,750,000 of capital allowances were established of which £342,000 was identified as qualifying for Enhanced Capital Allowances.

The immediate tax benefit was £385,000 with a total tax saving of £622,000 being achieved.

Testimonial

“We planned to carry out a total refurbishment of our hotel over various phased contracts. The project was discussed with the tax and capital allowances specialists who provided procurement advice and ensured the relevant information to maximise and prepare robust claims for tax relief would be available. The capital allowances claims had a very beneficial impact on the cashflow of the phased works and the approach by SG Capital Allowances maximised the expenditure allocated to Enhanced Capital Allowances, Land Remediation Relief and Revenue Expenditure.”