SERVICE STATION INVESTMENTS - MAKING THE MOST OF CAPITAL ALLOWANCES
 Service Stations
Service stations can be an interesting investment opportunity in relation to capital allowances. They will contain the forecourt services and often a kiosk or convenience store of a certain size.
Values of allowances
Capital allowable within these investments will include such items as the forecourt pumps (where owned) and tanks under the forecourt and all machinery associated with fuel sales, all mechanical and electrical installations and store fittings, sales equipment etc within the store or kiosk. Other items include air machines or car wash and any other service facilities as well as a proportion of the canopy if there is signage attached.
The potential range of allowable items can represent a significant proportion of the purchase price in some circumstances.
This value can then be set against your Corporation or Income Tax at varying rates annually dependent on whether it is categorises as integral plant or main pool plant. In total, you will be able to save the value established at your rate of tax.
The seller’s position
If a seller is aware of capital allowances he may well have made a claim. However, in many situations claims have not been made through lack of awareness or because of lack of profit.
Knowledgeable sellers will try and pass on little or no value on the sale by use of contract clauses and elections. In this market where buyers have more power it is possible, before the sale is exchanged, to negotiate for the full value of allowances.
Where a seller is unaware, or has made no claim himself for any reason, any allowances available can pass over with the sale, but some safeguards can be useful.
The valuation mechanism
Where no claim has been made, valuation is based on an apportionment of the price paid for the property. This involves assessing a rebuild cost for the property, an appropriate land value and detailed costs of the plant and machinery.
This is not as complex as it first appears and as specialists we have developed cost effective systems for valuing and agreeing these allowances with HMRC.
Key contact
Andy White Davis Langdon LLP
Mid City Place, 71 High Holborn, London WC1V 6QS
Phone: 020 7061 7000
Fax: 020 7061 7061
Email:
andy.white@davislangdon.com |
