Case study – Capital allowances price enhancement on hotel

  • Project type – Hotel development and sale

  • Total expenditure – £24m

  • Total plant and machinery allowances – £9.5m

  • Total tax saving @ 20% – £1.9m

We received instruction from a long-standing global investor client to prepare a capital allowances analysis on a development in Manchester. Part of a £90m regeneration scheme, the development included a hotel, restaurant and retail units.

We worked with the project team to understand the tax efficiency of the design and identify aspects of the mechanical and electrical design that could accelerate the tax relief available without compromising on the specification or overall design.

During the construction phase, we carried out 2 site surveys to identify, record and prepare supporting cases for elements of our valuation to ensure that HMRC would be comfortable with items claimed.

Following completion of the development, our client received a significant offer for the site.  During the due diligence and contract negotiation, our client requested we prepare a detailed assessment of the potential future value of the capital allowances for the benefit of the purchaser. This resulted in an uplift in the purchase offer by a further one million pounds.

We were able to advise on the specific contract wording and prepared the necessary CAA 2001 s198 election to pass the full benefit of the allowances across to the purchaser.

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