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Land remediation

The professionals call it ‘land remediation’ and it’s a phrase that can fail to connect with a busy dealer. But there are tax advantages for those moving or expanding, though many fail to take advantage of them.

“Most dealers rely on their accountants for anything to do with taxation,” says Alun Oliver, a chartered surveyor, who is managing director of E3 Consulting, which specializes in property tax advice. His company has advised Audi, Nissan and Toyota dealers.

“This is a specialized area where people can struggle and many dealers are losing out,” says Oliver. “You can gain tax relief on the cost of cleaning up a site, as long as you were not the polluter.”

The letters to remember are LRTR (land remediation tax relief), which was introduced in May 2001 (£42m in tax relief has been granted by the beginning of this year).

It can be claimed if the land is affected by a range of substances, including asbestos, lead, zinc and cadmium.

“In a £1m development, a dealer might be spending as much as £100,000 on cleaning up the site,” says Oliver.

The rate of relief depends on the tax position of the company paying it. The relief can be paid directly to the company or be offset against outstanding tax liabilities.

Dealers move onto brownfield sites previously used for industrial processes when investment goes into an area.

Ben de Waal, a partner in commercial tax adviser Davis Langdon Crosher & James, says: “So many agencies can be involved that the area is a bit of minefield.

“The best starting point is the regional development agency. To gain a grant towards a new dealership on a brownfield site, you have to convince officials that you will be creating perhaps 50 jobs.

“You will also have to make out a case that the business will not be viable until further investment is made in the area. That can lead to a grant.

“If the business does better than anticipated, you could be called on to repay the grant. At worst, it’s an interest-free loan.”

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