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News Release from: EC Harris | Subject: Tax allowances
Edited by the Buildingtalk Editorial
Team on 05 October 2006
Ignorance widespread on tax allowances
Advice on capital allowances, land remediation and other tax relief schemes, is not being sought early enough says tax experts at EC Harris.
says EC Harris tax expert Regeneration and refurbishment schemes are costing developers and property owners significantly much more than they need, due to widespread ignorance of available tax relief incentives
This article was originally published on Buildingtalk on 21 Jan 2005 at 8.00am (UK)
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A specialist property tax expert has warned that millions of pounds are fuelling the Treasury's coffers, because advice on capital allowances, land remediation and other tax relief schemes, is not being sought early enough.
Martin Silvester, who heads the Birmingham-based tax team for international property consultants EC Harris said: "In spite of the government's attempts to stimulate the regeneration culture through targeted tax relief schemes, the incentives are being undermined as a result of companies and private individuals missing the boat".
"The main problem appears to be one of perception, in that a high proportion of developers and property owners believe that their accountant has it covered, but all too often this happens later down the line.
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We're not critical of accountants, they just don't necessarily have a specialist resource identifying the issues early on".
Calling for the need to build greater awareness of the incentives, not just by the government, but also by trade groups and advisors, Silvester pointed out that the smaller the company, the less likely it is to be aware of the tax relief benefits".
"In the Midlands alone, EC Harris' specialist property tax team of specialist surveyors and tax advisors has saved clients more than £200 million in tax relief in the two years since it was set up".
"As Silvester explained, nearly every regeneration or refurbishment project under development provides opportunities to claim tax relief".
""The key is to seek advice at an early stage and to factor tax implications into the whole project strategy to maximise recovery.
This may also involve changing the structure of the deal in order to manage the risks".
"Front-end planning is the way forward".
"An ideal scenario for example when acquiring a contaminated site is to consider who should undertake the remediation".
"It's not always the best option to simply transfer the risk - valuable tax relief opportunities can be missed whilst no measurable benefit is realised in terms of altering the risk profile "Our solution is to engage at the pre-planning stage to advise on the structuring, strategic planning and tax relief identification of all property transactions and projects, either across the whole portfolio or on a case by case basis".
"This enables corporate occupiers and landlords to take full advantage of capital allowances and other tax relief, that might otherwise be lost," he said.
The benefits are wide ranging as cost savings are maximised and cashflow positions improved.
By factoring tax savings into the financial models also increases viability at the project feasibility stage.
Getting specialist advice on board from the outset ensures there is a robust process in place, early in the project's life to analyse a development's structure even prior to land acquisition.
By putting the systems in place from the start, potential savings of between 8 per cent - 18 per cent of the contract spend can be made, depending on the spend profile".
""There is also a perception that if something is worthwhile, it involves a lot of cost in terms of compliance and administration, but as we work on a no win no fee basis, the client has nothing to lose and everything to gain," he added.
There are also significant savings to be made through maximising Land Remediation tax relief which may provide up to 15% cash savings for developers or up to 45% cash savings for investors and others incurring capital expenditure.
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