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Land Remediation Tax Relief- Your Questions Answered

Land Remediation Tax Relief entitles a company to claim an additional 50% tax relief on qualifying remediation expenditure as a trading expense, in the same year as the expenditure war incurred. This means that taxable profits are reduced, thus reducing the corporation tax liability of the company.

Their are several questions to be answered about land remediation tax relief, here are some of the key ones……

What is contaminated land?
Land is in a contaminated state only if there is something in, on or under the land which causes relevant harm, or if there is a serious possibility that relevant harm will be caused. Relevant harm can relate to:

Land is in a contaminated state only if there is something in, on or under the land which causes relevant harm, or if there is a serious possibility that relevant harm will be caused. Relevant harm can relate to:

Land is in a contaminated state only if there is something in, on or under the land which causes relevant harm, or if there is a serious possibility that relevant harm will be caused. Relevant harm can relate to:

  • death of living organisms or significant injury or damage to
    living organisms,
  • pollution of controlled waters,
  • a generally adverse impact on the ecosystem, or
  • structural or other significant damage to buildings or other structures or interference with buildings or other structures that significantly compromises their use. HMRC accept that the likelihood of relevant harm occurring varies according to the land use.

Is there a definition of contaminated land costs?
The general definition of contaminated land costs are those incurred in, ‘preventing, minimising, remedying or mitigating any harm or pollution of land or controlled waters, by reason of which the land is in a contaminated state, or restoring the land or controlled waters to their former state’.

What expenditure qualifies for Land Remediation Relief?

  • staffing costs
  • materials
  • subcontracted costs incurred from both connected and non-connected companies
  • professional fees incurred for advice on how to remediate the contaminated land.

Does the relief just apply to companies?
Yes! The relief is not available to individuals or partnerships. However, a company that is a member of a partnership can make an election in respect of its share of the partnership’s land remediation expenditure provided it satisfies the relevant criteria.

Are there any conditions to claim this tax relief?
The relevant conditions for relief are that:

  • land in the UK is, or was, ac-quired by the company for the purposes of its trade or property business, and
  • at the time the company acquired the land all, or part, of the land was in a contaminated or derelict state, and
  • the company incurs revenue or capital expenditure on qualifying land remediation in respect of the land.

Are there any exclusions?
A claim for land remediation relief will not be possible
if the company:

  • has already claimed capital allowances on the same expenditure
  • is the original polluter if the site was purchased from a connected company which was the original polluter, no claim will be possible.

How do I claim and is there a time limit?
The accounting treatment determines when a company can claim land
remediation relief for revenue expenditure. A company can claim land remediation relief for qualifying revenue expenditure in the accounting period where the expenditure is deducted in calculating the profits. Many
property development companies will hold land as WIP in their accounts during the development of a site. Only when the remediation costs are released to the profit and loss Account will a claim for land remediation relief become available.The normal rules apply when amending a corporation tax return (i.e. within 12 months of the statu-tory filing date).
A company, carrying on a trade or property business, can also elect that capital expenditure on qualifying land remediation is allowed as a deduction in computing their taxable profits. The deduction is allowed in the tax computation for the accounting period in which the capital
expenditure is incurred.

Can I claim land remediation re-lief for bringing derelict land back into productive use?
Yes! For expenditure incurred on or after 1st April 2009,relief is available for expenditure incurred in bringing derelict land back into use. What constitutes derelict land is dependent on several factors. It must also be noted that to claim land remediation relief, the land must be derelict at acquisition.

For more advice and information about Land Remediation Tax Relief please Contact Us Here
http://www.oandk.co.uk/contact/

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Capital Allowances – Some Useful Information for Commercial Property Owners

Capital allowances enable commercial property owners to obtain tax relief related to capital expenditure. Properties with these allowances tend to be more valuable then identical properties.

These allowances are available when a commercial property is purchased, constructed, fitted out, refurbished, or extended. Even if these events happened a number of years ago, it may still be possible to go back and revisit the potential for a capital allowances claim.

Qualifying commercial property includes:

Shops
Offices
Hotels
Restaurants
Care Homes
Pubs
Factories
Industrial units
Warehouses
Student Flats Communal Areas

Here are some practical steps for you….

Identify any commercial properties you have bought or improved where you have not claimed capital allowances.

Ascertain whether you have profits to offset the allowances against.

Capital allowances are a tax relief. It is important to ascertain whether you are paying tax or are expecting to do so.

Undertake a site survey to take an inventory of everything in, on and around the premises. Some things may qualify for this tax relief. Desktop reviews can be performed in certain circumstances.

Produce a HMRC friendly report and apply to HMRC for the relevant refund.

In consultation with our Business Friends ‘Yes Tax’ we have produced a great Fact Sheet. This will answer most initial questions about Capital Allowances for you as a Commercial Property owner. Click HERE to download your FREE fact sheet.

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R&D Tax Credits – Your Questions Answered

Introducing the most underclaimed company tax credit available.

Research and Development (R&D) Tax Relief rewards companies for innovation. It is an unmissable opportunity to claim either a reduction in corporation tax or, for loss making companies, a payable tax credit.

Most claims are for companies operating in the ordinary course of their business. This may include developing new products, processes or services or duplicating existing products and processes in an appreciably improved way. The development does not have to be blue sky innovation, as long
as the work being undertaken attempts to resolve some form of technical or scientific uncertainty.

Here we have tried to answer some of the questions you may have, please do not hestitate to Contact Us Here for more assistance

If you’ve got a query that’s not addressed here or anything isn’t
clear, please feel free to contact us! There isn’t a question about R&D tax relief we can’t answer!

What counts as qualifying R&D activity?
HMRC’s definition of R&D is purposefully broad. Regardless of size or sector, if a company is taking a risk by attempting to “resolve scientific or technological uncertainties” then it may be carrying out qualifying activity. This could include:
• Creating new products, processes or services.
• Changing or modifying an existing product, process or service.

Can I claim for aborted R&D projects?
Yes! R&D doesn’t have to have been successful to qualify.
The fact that a project has been aborted is often a good indicator that R&D has taken place.

How will I know if I qualify for R&D tax relief?
If you’re asking yourself this question, take comfort in the fact that most of the companies we deal with find themselves in this position. This is where a conversation with us is essential. If some kind of improvement has been attempted and a technical uncertainty can be demonstrated then there is a good chance the company will qualify. One point to note which often comes up in conversation with clients is whether simply improving the state of knowledge within the business qualifies for R&D tax relief. It’s important to note that the company has to be furthering the knowledge in a field of
science or technology and not just it’s own knowledge.

Can I claim if I’m a sole trader?
Unfortunately, R&D tax relief only applies to companies

What do HMRC need to approve a tax claim?
We have developed a reliable reporting strategy that provides HMRC with everything they need to approve a claim.This involves a comprehensive technical report outlining the projects which meet the qualifying criteria for relief as well as a detailed financial report which offers a breakdown of the costs included in the claim.

I’ve never claimed R&D tax relief before. Can I claim retrospectively?
Making a retrospective R&D tax claim follows the normal rules for amending any corporation tax return. Companies can claim up to two years previous

As an SME we’ve have received grant funding – can I still claim R&D tax relief?
The simple answer to this question is Yes! The interaction of grants and R&D tax relief can be complicated, but we’ve summarised the most common
situations below. I’ve received a grant which is notified state aid Common grants which fall under this category are Smart

I’ve never claimed R&D tax relief before. Can I claim retrospectively?
Making a retrospective R&D tax claim follows the normal rules for amending any corporation tax return. Companies can claim up to two years previous.

I am an SME and have received grant funding – can I still claim R&D tax relief?
The simple answer to this question is Yes! The interaction of grants and R&D tax relief can be complicated, but we’ve summarised the most common
situations below.

I’ve received a grant which is notified state aid
Common grants which fall under this category are Smart Grants and any grants which fall under the General Block Exemption Regulations (GBER). If you have received a notified state aid grant which is either specific to the project you want to claim R&D tax relief on or is non-specific (i.e. it covers
your general R&D activity), then any claim for R&D tax relief will have to be made under the less generous large scheme. However, if your grant is project specific, it’s important to note that other R&D projects which have been exclusively funded by the company will be eligible for the SME rate

What costs can be claimed?
HMRC have six clearly defined categories of qualifying expenditure. These are: staff costs, subcontracted R&D costs, Externally Provided Workers, consumables, software and certain energy costs

Can my claim trigger an enquiry by HMRC?
The R&D tax claim is just another part of your corporation tax return and normal enquiry window rules apply. We have extensive experience in dealing with enquiries concerning R&D tax claims. This gives you peace of mind, knowing that your claim will be handled by advisers with years of experience in dealing with HMRC

I’ve made a claim and I’m expecting money back. How long will it take?
If your claim is for an SME R&D tax credit, HMRC aim to repay monies due within 28 days. However, this is not a statutory requirement and many factors result in this target being missed. HMRC’s R&D units are extremely busy, particularly in December, March and September. Often, claims can take 3 or 4 months to process

What is the definition for an SME or large company?
There are two schemes. One scheme is for small and medium sized enterprises (SMEs) and the other scheme is for large companies. Generally speaking, an SME is a company with:

  1. Fewer than 500 employees AND
  2. Annual turnover less than €100 million Euros OR
  3. Total assets on the balance sheet totalling less than €86 million Euros
  4. A large company is one that does not meet the definition of an SME.

Our experts Alison Lynch and Natalia Shaw are on hand to give as much advice as you need. See their profiles on Our Team Page Here.

They would love to help you with your R&D claim, you may be surprised, so get in touch on 0208 686 7756 or info@oandk.co.uk