Smith Kelland acts for and advises purchasers on various kinds of acquisitions, providing a guiding hand through the various obstacles encountered. Many are
off-market acquisitions. Our experience includes advising purchasers on acquiring individual trophy assets valued at in excess of £150m.

Purchasers of commercial property can take many forms including a limited company, a property unit trust and a partnership.

It is important for purchasers to seek timely professional capital allowances advice prior to exchange of contracts. In order to establish and assess the tax situation of both the property and the seller and to promptly take appropriate action to protect and enhance the purchaser’s position.

On property-direct acquisitions, regarding fixtures, the strict requirements of sections 187A and 187B of the Capital Allowances Act 2001 and their interaction with section 198 elections must be adhered to. This can be complex, but typically highly valuable.

We assist in establishing and understanding the seller’s position and intentions via deciphering replies to enquiries, liaising and drawing on our knowledge and experience of similar scenarios. Crucially, we advise on the drafting of appropriate contract clauses to protect the purchaser’s tax position. Following this, we then progress as necessary with undertaking detailed analysis of previous expenditure and projects, culminating in drafting and entering into a section 198 election.

For some acquisitions, simultaneous section 183 and 199 elections are required. For other transactions, an election is not required. Increasingly, section 270IA means structures and buildings allowance statements are required to be prepared and passed onto purchasers. In other situations, historic capital contribution allowances will need to be analysed, quantified and passed onto the purchaser.

Where the purchase is by way of a corporate acquisition such as the acquisition of a Special Purpose Vehicle (SPV), there are different issues to address.

Whatever the situation encountered, Smith Kelland has the experience and mindset to reconcile any issues, protect and maximise the purchaser’s position and to produce memorable results.

Smith Kelland has extensive experience of protecting and maximising the capital allowances position of investors and landlords when selling a property.

It is important that the capital allowances strategy and approach is considered well in advance of going to the market. This is especially apparent where either, the seller has claimed capital allowances on the fixtures, or could have claimed but has not.

Technically correct and time-appropriate clauses need to be drafted into the purchase contract.

Where the seller has claimed, a section 198 election will be required. It is generally in the seller’s best interests to elect the section 198 value for as low as possible. Where the seller has claimed the super-deduction or full expensing on fixtures, the specific elected value for those fixtures should be kept as low as possible. Because this will reduce the amount of the balancing charge.

Where the seller has not claimed plant and machinery allowances on the fixtures, but could have claimed, the purchaser will likely require the seller to make a claim. This is where additional complications do arise and genuine experience and a calm head come to the fore.

Depending on specific circumstances, one or more structures and buildings allowance statements may need to be prepared and provided to the purchaser.

We advise a finite number of accountancy firms, property agents and lawyers who value our mix of practical experience, quantity surveying skills, discretion and confidential approach. We are preferred advisers to a number of firms. In these situations we know our place, understand the requirements and recognise the exacting standards required of other professions.

Because we are nimble and our arrangements are flexible, we can work on a project-by-project basis or be appointed direct by the incumbent client.

Capital contributions are a mainstay of the UK office leasing market. A capital contribution is tax efficient for a landlord contributing to a tenant’s fit-out – provided the agreement clauses are carefully drafted. That is the most important bit.

For landlords, as much of the contribution as possible should be towards assets qualifying for full expensing.

Category A works and Category B works are often required to be separately identified where the tenant is undertaking both works.

Smith Kelland is experienced in helping both landlords and tenants, either separately or with coming to an equitable agreement for the greater good, on capital contributions and analysing expenditure for contribution allowances purposes. We regularly advise and work on capital contribution agreements in excess of £1 million.

We work with a finite number of energy services providers. We are experienced in advising on energy services agreements projects, including on projects involving UK wide multiple sites.

Great care, planning and correct procedure is required at the outset to enable the energy services provider to be entitled to own and to claim the substantial and valuable capital allowances on each project. Because entitlement does not happen by chance. There are various hurdles to overcome.

Our involvement commences early – at the stage of drafting the energy services agreement contract and continues all the way through to clearly quantifying the expenditure, drafting and arranging appropriate elections and compiling detailed reports. We also advise on the sale of such projects.

We have produced excellent results for our energy services provider clients.

We undertake initial reviews and appraisals of capital projects, to provide stakeholders with an assessment of the categories of capital allowances available and the amount of allowances.

In addition, we also review projects to assess whether an entity has the legislative entitlement to claim capital allowances and to recommend appropriate action where necessary.

Historic reviews typically occur where property expenditure was incurred many years ago by the current owner and, for whatever the reason, the capital allowances have not been claimed. Such reviews and subsequent detailed analysis can produce surprising capital allowances amounts which can be rolled forward.