Structures and Buildings Allowance: Proposed Additional Requirement to Allowance Statement
Following the release of our recent blog Structures and Buildings Allowance – Capital Allowances (published 30 June 2021), HMRC have published a policy paper on a proposed additional requirement for preparing an allowance statement. The allowance statement is required to make a claim for Structures and Buildings Allowance (“SBA”) and this proposed amendment will have effect once the next Finance Bill 2021-22 receives Royal Assent.
In order to make a claim for the SBA, the current requirements that the allowance statement must meet are as follows:
- Details of the building or structure;
- The date of the earliest contract for the construction of the building or structure;
- The amount of qualifying expenditure incurred on its construction or purchase;
- Where the qualifying expenditure consists of Freeport qualifying expenditure, the allowance statement must state the amount of Freeport qualifying expenditure; and
- The date on which the building or structure is first brought into non-residential use.
In addition, in the case of purchasing a building or structure, the purchaser should obtain the allowance statement from the seller and retain it for the business’s records for HMRC to check for any claim for SBA. HMRC have previously confirmed that there is no requirement to routinely disclose the allowance statement to them.
HMRC have also previously confirmed that the business can include subsequent qualifying construction costs onto the existing allowance statement where capital improvement or renovation costs are incurred on a building that already meets the requirements for the SBA. In addition, where the building is sold, HMRC stated in the above link “… the relevant parts of expenditure must be clearly identified on the allowance statement“.
Proposed Additional Requirement
HMRC have confirmed that there has been no consultation on the proposed amendment due to only being a minor change to the current requirements. The proposed additional requirement is as follows:
“…where qualifying expenditure is incurred after the asset is brought into qualifying use or treated as incurred under the simplification rules, the allowance period starts at a later date. This measure requires the allowance statement to include the date qualifying expenditure is incurred in situations where the allowance period commences from this later date”.