2015 Case Study – GP Surgery (Built 2009)

by admin on July 1, 2015

surgerywaitingroomWe were instructed in January 2015.  A doctor had built a new surgery in 2009 at an invoiced cost of £1,500,000.  At the time, the accountant had claimed £151,000 in plant and machinery allowances under Part 2 of CAA2001 based on total construction expenditure.    The instruction was a historical claim based on events of 6 years before.

Due Diligence was carried out in relation to Sections 185 and 187a CAA 2001.  The property was not at any point tenanted and therefore there was no possibility that identified plant and machinery has already been claimed by tenants. We therefore conclude that this was a limited restriction claim pursuant to section 185 CAA 2001 (in relation to the £150,800 in allowances previously claimed) and that section 187a did not apply.

This was a new build project carried out by our client commencing in late 2008 and being completed September 2009.  Legislation relating to integral features therefore applies to this project.

Of the £151,000 claimed at the time, it transpired that £20,000 related to chattels.  An analysis of the Fixed Asset Register supplied by our client’s accountant set out what capital allowances claims were submitted since 2008.  A survey inspection was additionally carried out for the purpose of identifying, logging and value potentially qualifying expenditure in relation only to inherent fabrications, and plant and machinery within the property. In terms of the history of the premises, all significant building works and fit out were fully completed in late 2009 and there had been minimal repairs or capital expenditure needed since this completion date.  The client’s accountant confirmed that the £151,000 already claimed is the full extent of capital allowances previously claimed in respect of this building.

A reconciliation was then carried out between the results of this valuation report and the initial claim.  This reconciliation was (a) to compare the contracted and actual build cost with the surveyor’s inspection costs, and (b) to compare detailed expenditure items between the two.  Reconciliation (a) was to make sure that the overall figures were similar and individual cost items could therefore reasonably be used for comparison purposes.

In terms of the detailed comparison, the following outcomes were identified:

  1. Items that were claimed at the time but were not specifically logged by the surveyor. Such as the reception desk, security shutter, thermafloor insulation, demountable ceiling. No additional claim was made for these items.
  2. Items identified in the survey which were not claimed at the time at all; these were mainly the Integral Features such as mechanical hot and cold water installations, mechanical gas installations, electrical (electricity supply, ring mains, lighting circuits, fittings and consumer unit), kitchen /fridges, and external and internal door locks and handles. These items were included as additions to P&M as omitted from prior claim.
  3. Items that were claimed at the time and also match with the survey valuation.  No additional claim has been made for these items.  We took the prudent view that the figure claimed at the time on a specific item will be the correct figure.
  4. Items that were partially claimed at the time and were a subset of a larger item logged in the survey valuation. An example of this is the electric doors. At the time, only the electrics for this door system was claimed. However, the surveyor has logged all of the door mechanism and associated electrics and systems as qualifying P&M. In this case, only the net difference between the two figures has been used for the proposed addition.

Following our detailed anaylsis and report, we identified the following total additions required to complete the plant and machinery claim based on qualifying expenditure incurred by the client.

Additions to Plant and Machinery pools – £240,000

Marginal Tax Rate of surgery owner – 45%.

Total Tax Saving – £108,000


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