System Design and Sampling
Establishing tax relief claims for significant, cyclical and repetitive capital expenditure can be difficult, time consuming and costly. Formulating a system based or sampling approach can maximise tax relief claims, reduce production costs and eliminate claim errors and inconsistencies.
Issue
Businesses often establish a consistent methodology when making tax relief claims which through time can breed familiarity. But as businesses are dynamic, their profiles change and expenditure patterns can emerge very quickly. Additionally, as property portfolios increase, so do maintenance and refurbishment costs, with the corresponding increase in tax relief claims. At the same time, HMRC enquiries and queries are becoming increasingly frequent. As a result, most businesses with regular or cyclical expenditure will benefit from an efficient workable tax systems approach; such systems are no longer just for big business!
Relief
Efficient and effective tax processes can represent up to an additional 15% cash savings in increased tax claims. Reductions in production costs can equate to savings of between 30%–70% of employee and consultant costs. Involving HMRC at an early stage, when formulating a systems approach can sometimes reduce the likelihood of enquiries in the future.
Approach
We are a team of tax qualified property professionals with senior level experience at the Big 4 Accountancy firms. As a result, we understand the development issues, and all the tax and accounting aspects of construction projects. We are specialists who can work alongside your own tax and project advisers. Offering a complete service, we can undertake feasibility and entitlement reviews through to claim preparation and securing the best possible claims with HMRC.
Detail
Tax relief processes and systems can incorporate Capital Allowances, Land Remediation Tax Relief and Revenue Tax Relief. These are available to most owners who incur capital expenditure for the purposes of their trade. Each year the Finance Act brings legislative changes which must be considered in all tax process systems.
Opportunities
- Considering tax in all early expenditure and processes allows potential claim values to be incorporated into acquisition strategies.
- In the right circumstances, using pro-forma documentation can produce more consistent, maximised and accurate claims.
- Subject to sample size and project deviation, a sampling approach can be used on repetitive or similar sized projects.
- Historic analysis of relevant claims can be used to reference future similar claims.
- Improving accounting and tax systems can result in more informed, open and beneficial working relationships between internal departments and HMRC.