Property Purchase

A care home business acquired an existing care home in 2015 for £1.6m but had yet to make a claim for capital allowances (CAs).

The pre-purchase enquiries confirmed that the seller had owned the property since 1995 (with a full refurbishment in 2007) but had never claimed the CAs available. When acting on the transaction, the solicitor had assumed this was sufficient to ensure the purchaser could benefit from the CAs in the future.

Due to changes in the Capital Allowances legislation in 2014 however, an election to pass the allowances to the new purchaser would have been required and the relevant dates for making such an election had now passed, so a significant proportion of the allowances were lost.

Prior to 2014, there were also significant changes to the Capital Allowances Legislation in 2008. As this was the first purchase of the property since 2008, we were able to make a claim on the ‘integral features’ within the property that the original owners were not eligible for.

We were able to claim £288,000 of CAs with a cash value of around £55,000, some of which was claimable as an immediate cash repayment.

Had the appropriate election been put in place, the level of allowances available to the buyer could have been significantly higher.

We would therefore urge anyone about to purchase or dispose of a commercial building to ensure the relevant clauses are included within the contracts.