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Tax changes impact acquiring dealers

Dealer groups that own premises may be affected by the changes in tax legislation which came into force on April 1.

The way in which capital allowances are passed between the buyer and seller of a commercial property changed significantly on that date and the impact on motor dealers in particular could be far-reaching, warns chartered accountants and tax advisors Carpenter Box.

The new rules affect all new commercial property transactions after that date and were introduced by the Government in an attempt to formalise the process by which tax relief for fixtures and fittings may be claimed by the purchaser of a commercial property.

In the case of motor dealers owning, they may be entitled to claim tax relief for the cost of certain fixtures and fittings in their building, including showroom items and even lighting and electrical wiring – or anything that legally belongs to the freeholder of the premises which is plant and machinery.

David Crowter (pictured), tax associate at Carpenter Box, said: "For many motor dealers, the cost of these fixtures in terms of capital allowances can be as much as 30% of the total cost of the building and this value can transfer to the buyer along with the property. However, the way in which they transfer changed earlier this month and if a seller who is entitled to capital allowances has not already claimed, then the buyer gets nothing.

"It is essential for motor dealers in particular, whether buying or selling premises, to take specialist capital allowances advice during the conveyancing process. They must agree the value of any fixtures and fittings at the time of the contract; if they fail to do so, it could cost them a lot of money.”

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