Commercial property owners could be missing out on lucrative capital allowances – or tax rebates – simply because they are unaware of how to identify their rights with regard to potential claims. This is the message from CA Tax Solutions Limited, a company dedicated to capital allowance claims in relation to the commercial sector.

Miranda Atty joined the Managing Director Mark Tighe for a coffee this week, to discover how intermediaries and their commercial clients can take advantage of this scheme and gain valuable tax relief.

The company’s proposition is simple. Mark explained that CA Tax can help any individual, paying UK tax, who owns a commercial building which they paid in excess of £400,000 for and which does not have any prior capital allowance claims. According to Deloitte, claims have not been made on 96.4 per cent of all commercial properties. Rather than securing finance against a property, Mark’s company investigates whether the client has recouped all the money relating to their property that they are entitled to.

Essentially, CA Tax identifies unused capital allowances – a form of tax relief available to anyone who has incurred capital expenditure when building, changing or buying commercial properties. First implemented in the 1940s post-WWII, the legislation decrees that commercial properties which have had changes made to the intrinsic basics of the property – for example security systems, lighting and air conditioning as opposed to carpet, curtains or floor tiles – may qualify for a tax rebate. The tax relief was designed to encourage people to invest in property and build on their businesses after the Second World War.

Mark said: “The Government had a chance to revoke this law at the beginning of April but they chose to continue with it, despite making a few tweaks to the legislation. Nine out of ten commercial property owners qualify for a rebate, and, although there are five or six other companies operating in a similar space to ours, considering there are 800,000 commercial buildings in the UK there is still an incredible amount of business to get through.”

So, how exactly does the process work?

With the main body of work coming from introducers – particularly accountants, commercial property agents, conveyancers, IFAs or commercial insurance companies – CA Tax is widely utilised by a range of intermediaries. Mark explained, “To be honest, any introducing party can refer their clients to our services. There are two guarantees we offer.

“We won’t charge for the initial investigation to find out whether a client is owed a tax rebate or not. And secondly, if we do find there is a claim and it is for less than £50,000 of allowances then the work is also free.

“If we find, say, £100,000-worth of allowances for a 40 per cent taxpayer then they will benefit to the tune of £40,000. For an individual income taxpayer we charge seven per cent of the tax allowance plus VAT – so, for example, if the client receives £100,000, we would charge them £7,000.

“If the client is a limited company then the fee chargeable is reduced to five per cent plus VAT.”

And what about introducers?

Introducers are offered, “15-20 per cent of CA Tax’s fees,” we were told. Mark offered the following case example:

“We were approached by a company that had purchased, back in 2008, a ground floor retail outlet and three-storey office block in Southport for £2 million. Having first established the capital allowance history of the property and double-checked that the company’s accountants had not already looked into this area itself, we carried out an in-depth forensic survey of the property.

“We quickly identified £498,954 of unclaimed capital allowances, which arose out of the structural constituents of the building, including heating and ventilation systems, gas, electrical and security installations – areas that remain hidden to anyone who doesn’t possess a detailed understanding of capital allowances law.

“After tax at 21 per cent, the gross benefit for the client was £104,780, while the net benefit, after our tax-deductible fee of five per cent plus VAT, was £80,614. On the example above, an introducer would have received 15 per cent of £24,947 – or £3,742.”

Whilst some of their regular introducers and accountants were sceptical at the start, CA Tax actually operates a strong repeat business system as introducers seem keen to pass on all their clients who may qualify. Mark used a doctor analogy to describe his company’s role: “Accountants are like GPs – they know everything about the body but you would not ask them to conduct brain surgery; you would bring a specialist consultant in to work in such a niche arena. We are like those brain surgeons but we specialise in capital allowance.”

Mark added, “CA Tax Solutions also offers training sessions for partners to help them understand any questions clients may have. Recently we completed a seminar in the Gherkin building in London advising introducers, but it is something we want to do up and down the country, not just in the capital. On request we are happy to talk to any potential introducers – whether by presenting a seminar, conducting a video or via an audio call.”