Readers are reminded that the transitional rules governing when a purchaser of commercial property can claim fixtures on an acquisition after April 2012 come to an end on 31 March for Corporation Tax and 5 April for Income Tax. After that date, new complexity is added to such transactions.

By way of reminder, Finance Act 2012 introduced changes which impact on the ability of a purchaser of commercial property to claim capital allowances on the fixtures therein. During the transitional period of April 2012-April 2014 only the fixed value requirement was required to be satisfied. Broadly, that requires a joint election under sections 198 or 199 of the Capital Allowances Act 2001. In cases where the parties can’t agree or one of those elections is not possible, the fixed valued requirement contains an option for either party to refer the case to the First-tier Tribunal within two years of the property sale to fix the disposal value of the fixtures.

For purchases from April 2014 when the transitional period ends, in addition to the fixed value requirement, any seller who could claim capital allowances must have pooled the expenditure on the fixtures or have claimed a first year allowance in respect of same. This is known as the mandatory pooling requirement and must be satisfied by the vendor in the chargeable period beginning on or before the day the property is sold. There are no exceptions to this requirement.

One point that must be made is that it is the purchaser of a property who is likely to be affected the most by these new rules and possibly has the most to lose. These issues will thus require careful attention in advance of any commercial property transaction otherwise any future rights to claim these allowances will be lost to the buyer in addition to any future owner of the property.