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Morris Lane News >

What a relief for caravan park owners!

It is not widely known but it is possible to claim capital allowances on fixed plant in addition to caravans, cars etc.  In the case of caravan parks this could include swimming pools, sanitary fittings (baths, wash basins etc), hot and cold water supplies, electrical installations and heating.  Historically, it has been possible to make a claim at any time after the expenditure on these items has been incurred (including the original purchase of the park).

The flexible time period has provided considerable advantages; for example, if a business was making losses or the profits were not high enough to be subject to higher rate tax at the time, a claim could be left until there were greater tax benefits.  In addition, if a park owner was unaware of the ability to claim such allowances, the allowances would not be lost.

However, on 6 December 2011, draft legislation was published which, amongst other matters, requires claims for expenditure incurred after 1 April/6 April 2012 to be notified to HMRC within two years of the expenditure being incurred otherwise the eligibility to claim for this will be lost.

As a consequence of the proposed legislation, it is much more important that the question of capital allowances for fixed plant is addressed prior to the exchange of contracts for a park.

It is also worth noting that there is an upper limit in respect of which 100% relief can be claimed in respect of items eligible for capital allowances which HMRC are proposing to reduce on 1 April/6 April 2012.  The rules are particularly complex but if a park owner is considering capital expenditure there may be a tax benefit in bringing this forward.

Thanks for this article go to Morris Lane, Chartered Accountants, who have a specialist department which deals with the making of such claims, drawing on their specialist tax and valuation skills, including those of their in-house Quantity Surveyor.  For further information contact Mike Clark on 01202 715 950.