Group capital allowances under review
If your company is part of a group, or is connected to other companies, you may receive a letter asking you to check if you have overclaimed capital allowances. Why might this have happened and should you be worried?
The annual investment allowance ( AIA) gives 100% tax relief on qualifying expenditure up to a specific limit (currently £1m), most commonly for plant and machinery. Group companies and those under common control all have to share a single AIA, to prevent abuse of the relief. Additionally, if there is a short or long accounting period, the AIA is apportioned accordingly. These considerations may be overlooked, meaning excess claims can occur, e.g. where two group companies both claim £1m.
If you receive a letter, it does not automatically mean that you have overclaimed. Such large scale campaigns are based on mass data mining, which is far from perfect but gives HMRC a reasonable base with which to identify potential errors. You should firstly check that the correct amount of AIA has been claimed for the accounting period(s) specified in the letter. If you discover a mistake, it should be corrected within 30 days of the date of the letter. However, if the AIA has been claimed correctly, it is still necessary to confirm this to HMRC using the contact details provided in the letter, otherwise an enquiry may be opened.
Related Topics
-
Alternative education providers can protect VAT refund claims
HMRC has confirmed that some alternative providers of higher and further education can submit VAT refund claims following a Court of Appeal ruling, despite HMRC appealing the decision to the Supreme Court. What do you need to know?
-
Old IHT forms will be rejected
HMRC has stopped processing old versions of the Inheritance Tax IHT100 forms from 31 August 2026. Anyone reporting an IHT chargeable event involving a gift or trust will need to make sure they are using the correct forms. What do you need to know?
-
The tax incentive to do a thorough stock-take
The annual stock-take isn’t exactly your favourite thing to do. You know resources could be better spent elsewhere so you try to get through it as quickly as possible. Why might it be worth a little more of your time?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.