Capital allowances – new consultations
HMRC published a number of new consultation documents on 31 May 2011. Three of the consultations related to the following capital allowances issues:
Capital allowances for fixtures
This consultation document sets out the Government’s proposal for introducing ‘mandatory pooling’ announced as part of Budget 2011. Mandatory pooling would require businesses to pool their expenditure on fixtures in a building, within a short period of acquiring the building, in order to qualify for allowances. The proposals are aimed at preventing allowances from being given more than once on the original cost of a fixture.
Capital allowances anti-avoidance rules for plant and machinery
This consultation highlights proposed changes to the anti-avoidance to businesses that enter into relevant transactions involving plant or machinery. A relevant transaction is, broadly, a sale, a hire purchase or an assignment of a hire purchase contract. The proposals are designed to allow for the more effective prevention of tax avoidance.
Capital allowances for feed-in tariffs & the renewable heat incentive
The consultation contains the proposed legislation to clarify the appropriate capital allowances treatment of expenditure on plant or machinery that could qualify for payments under either the feed-in tariff regime or the renewable heat incentive. The aim of the proposals is to fix a rate of capital allowances for such expenditure that is both fair and certain, and ensure more consistent treatment between businesses.
HMRC are seeking responses by 31 August for all of these consultations.