commercial property owners

Commercial Property Owners: Have You Claimed Tax Relief?

Linkilaw Commercial Property

This Is A Transcript Of The Video, “Commercial Property Owners: Have You Claimed Tax Relief?”

Andrew: Just give me a little bit of background about Butterworth’s. You’ve been a panel member of LawyerFair, a loyal panel member of LawyerFair, for many, many months, probably almost since we started actually. A great office and firm for us to deal with, so just a bit of background about the firm.

John: Yeah, sure. We started life in 1993. Originally we had one chap, the original senior partner, Tony Butterworth, who’s still around and alive and kicking. Originally started life as a High Street firm doing things like crime, matrimonial, residential conveyancing. Out of the residential conveyancing we started getting some corporate contacts and then began to realise there is life beyond that standard High Street work. We still deal with a lot of very strong residential business just outside the Top 50 with Land Registry. 

My focus now really is on the commercial side or has been for a while. We’re looking to build commercial property work. We do quite a lot of commercial property work. It’s mostly transactional work. We would be the first people to say we don’t do that kind of top five percent brain surgery which is the domain of city firms and we know that. We don’t have a team of 26 people to work on a merger.

The converse of that is what we offer is sensible, focused, reasonable price commercial legal transactions. A lot of our clients are SME’s. We’ve got very similar issues, businesses and them so we know how they work; we know what’s needed. That’s where we really sit and we sit in that space for commercial property work, so leases, acquisitions. We sit on that space for litigation work, so we do a lot of tailor business long claims, again, that SME market, actually started getting into the agricultural market and also general commercial work. We’re quite innovative and quite creative in terms of the way we draft things, partnership agreements, joint ventures. We fairly well that’s really where we want to stay.

We’re not really trying to compete with the big boys. They do very well and we’d struggle with that, but really there’s a whole market that we can look at and that where we sit. We think we sit very well. We’re quite lucky actually because in it we’ve actually attracted some quite big clients who quite like that common sense ethos about who we are and what we do so we’re developing. The team’s still quite small, six in the commercial team and aspirationally we’d like probably double that.

That’s where we are litigation very strong now. We’re very, very strong on litigation. I think we’re very keen on being known as the go to for transactional business on the commercial side.

Andrew Weaver: As I said, John, you’ve been with us since the beginning and overwhelming positive feedback from customers of LawyerFair, so a great partner to us really in terms of our growth. Now, we’re going to focus on one particular area and you very kindly wrote an article. I’ll give just a bit of background. It’s actually an area that I’m not particularly savvy about. I must confess I see a lot of people on our Twitter feed offering advice on capital allowances. I park it alongside the guys who want to buy you 1,000 Twitter followers and articles on Kim Kardashian’s bottom or something. 

It’s not something that I tend to focus on much, but you wrote a great article for us and I want to just go a little deeper into people who buy commercial property and whether they’re missing out on tax relief because there was some changes recently, John, weren’t there?

John: Yeah.

Andrew Weaver: Just give us a bit of background to that.

John: Yeah, potentially there are people who’ve missed out because the thing with it is in the context of a transaction, lawyers will normally be focused on the key things title issues, searches. They’ll go a little outside of what you might look through in terms of planning.

Capital allowances a lot of lawyers will say okay tax is not my job. It’s not my role and actually we would say tax is not our job. What I think is our job and I think that we need, as lawyers, need to be alive to is that since last year the double claiming or the potential just to knock any claim from a donor. If a seller’s already claimed a couple allowances on fixtures and fittings, then a buyer’s not going to be able to do it again. It can take it back to basics really.

When you buy a commercial property in lots of cases you’ll buy the land and the buildings, but you’ll also buy fixtures and fittings. It’s possible to claim tax allowance on those fixtures and fittings that you buy. Now that it can only be claimed once that tax allowance on those fixtures, you’ve really got to be alive to it.

You’ve got to be alive to the fact that if the seller’s already claimed then the buyer’s claim will fail. There is a question in the standard commercial property inquiry form. Anyone who’s seen the standard form it’s about 40 pages long. It’s full of stuff that mostly doesn’t apply to the transaction.

You still see this it this day where the reply to the inquiry from the seller is that’s not applicable or see accountants which is fine, but actually it’s a real issue because you’re talking about real cash. You’re talking about a buyer of a commercial property being able to claim, in some cases, a fairly significant allowance, particularly when you’re thinking about industrial use where the fixtures and fittings can have some real value.

If you’re looking at a news agency and you’ve got a couple of pop stands or newspaper stands which is neither here nor there, but for some people they will buy industrial units so it’s a real difference. It’s a big deal. Really, the big thing is that historically it’s been the domain of the accountants, but really buyers need to be alive to it. You need to be asking your lawyer, have you checked? What’s happened?

In our standard now at Butterworth’s what we’ll do is we’ll look at that inquiry and if the seller is not specific we’ll go back and say actually have you claimed it? What are you doing? Get a specific answer and that’s really important from the client’s perspective.

Because if they’re buying from a corporate as they would do with say some sort of repossession of something like that. They’ll have a standard response in their inquiries where they’ll actually try and mitigate the allowance so they can keep it. You’ve got to be smart.

Andrew Weaver: That’s interesting.

John Cook: One industry where that’s massively prevalent are pubs. If you’re buying a pub or a licensed premises a brewery who’s selling will always try and get that capital allowance retained. There might not be one, but, again, you’ve got to make those inquiries. Then, get the clients accountant involved to see where it fits with their own tax strategy.

Andrew Weaver: Yeah, but I’m guessing, you’ve referred to accountants two or three times, John, but getting them involved earlier as well is pretty critical.

John Cook: Yeah, the thing is when you’re dealing with a commercial transaction for a client you’ve got to get accountant, if there’s any way you can get the accountants involved because you’ve got to migrate your role in being an advisor and not just dealing with the transaction. Yeah, because some commercial property transactions you could almost go through and not know you’ve done them. I think you’ve got to understand and we certainly understand that our job stretches beyond that.

Andrew Weaver: Yeah.
John: A conversation is always something we would do. You get used to it when you’re working on say share purchases because you get the accountant involved straight away.

Andrew Weaver: Yeah, sure.

John Cook: It’s a simple, it might well be the accountants view is that there’s nothing in it, but if part of your job and part of our job is we can save the client five or six thousand quid we’re going to do it.

Andrew Weaver: It’s taking a rounded view isn’t it? It might well be that people aren’t aware of these changes. I certainly wasn’t until you wrote that article and its impact. Just to wrap it up you mentioned that’s your job before we started recording about you can submit a claim during the last couple of years.

John Cook: Potentially yeah.

Andrew Weaver: Yeah.

John Cook: The thing with it is so many transactions that have gone through where neither the buyer nor the seller was aware of it. You’ll be selling a unit or you’ll be selling something and it just hasn’t been dealt with. As I’ve said, before the standard inquiry on the commercial property inquiries is just I don’t know man. Go and ask someone else and that happens a lot. If there are people who’ve brought property a couple of years there might be nothing in it. It’s worth a call. It’s worth an email. We work very closely with a couple of real specialists in this area that we have as part of our commercial property offering.

We can get an assessment no obligation and, again, it might be something that could save someone quite a considerable amount of money. If it hasn’t been dealt with and the seller hasn’t claimed then there is a potential.

Andrew Weaver: Listen, it’s a great subject to raise. It’s certainly good to make people aware of it even if, as you say, there isn’t anything in it. Now, listen you’ve got an office to redecorate and I’ve got to go and find out about Kim Kardashian.
That’s brilliant, John, and thanks so much for joining us.

John Cook: Yes, I agree.

Andrew Weaver: As I said Butterworth’s is a great partner to LawyerFair, so I really appreciate you giving us your time.

John Cook: No problem. Cheers, Andrew.

Andrew Weaver:Have a great day. Thanks, John.

John Cook: You too! Take care, cheers Andrew.

Andrew Weaver: Bye-bye.

John Cook: Bye

 

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