Group capital allowances under review
If your company is part of a group, or is connected to other companies, you may receive a letter asking you to check if you have overclaimed capital allowances. Why might this have happened and should you be worried?
The annual investment allowance ( AIA) gives 100% tax relief on qualifying expenditure up to a specific limit (currently £1m), most commonly for plant and machinery. Group companies and those under common control all have to share a single AIA, to prevent abuse of the relief. Additionally, if there is a short or long accounting period, the AIA is apportioned accordingly. These considerations may be overlooked, meaning excess claims can occur, e.g. where two group companies both claim £1m.
If you receive a letter, it does not automatically mean that you have overclaimed. Such large scale campaigns are based on mass data mining, which is far from perfect but gives HMRC a reasonable base with which to identify potential errors. You should firstly check that the correct amount of AIA has been claimed for the accounting period(s) specified in the letter. If you discover a mistake, it should be corrected within 30 days of the date of the letter. However, if the AIA has been claimed correctly, it is still necessary to confirm this to HMRC using the contact details provided in the letter, otherwise an enquiry may be opened.
Related Topics
-
Government launches consultation package on HMRC powers and tax administration
The government has launched a wide-ranging package of consultations on tax administration, including proposals to strengthen HMRC's debt recovery powers, modernise tax agent regulation and expand the use of digital services. Several of the measures could have significant implications for taxpayers and advisers. What has been proposed?
-
What are HMRC’s new procedures for export evidence?
HMRC has updated its guidance about the proof of export you must retain if you ship goods abroad and zero-rate the sales. How will the new guidance affect your business?
-
Getting out of the child benefit tax trap
You expect to earn over £60,000 for this tax year which means you may have to pay back some or all of your family’s child benefit due to the high income child benefit charge (HICBC). Is it possible to reduce the charge?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.