In Focus …
Mandatory Pooling – 18-months on…
Well that isn’t strictly accurate, the pooling rules governing entitlement to claim capital allowances were first introduced in April 2012 but we had a two year transition period before they became mandatory. So in 42 months what has changed? Here we take a look at what the wider property community has achieved in this time and lessons that should be learned
In early 2013 and then again in early 2014, the CPSE.1 was redesigned and introduced to take account of the necessity to address the issue of the seller’s entitlement to claim. In good faith, the latest Version 3.5, extended the capital allowances element (Section 32, if you are interested) and now includes specific questions regarding the seller’s position.
The Law Society then issued a practice note explaining that legal advisers to a property transaction should raise the issue of capital allowances as early as possible. Furthermore, the Law Society say that a specialist CA adviser should be consulted or ‘suggest your client consults a specialist’. It is worth mentioning at this point, the use of the word should, amounts to a suggested best practice on the part of the Law Society and does not imply that this is a specific requirement of the legal profession.
Shortly after, the transition period ended and the mandatory pooling requirement became unavoidable for those acquiring commercial property. Since then, Gateley Capitus have handled many hundreds of acquisitions on behalf of our clients, many, unfortunately, once the contracts had been exchanged. One would expect, however, that given the significant value attached to correctly dealing with allowances and the ample transition time, a smooth and orderly regime came to pass.
Unfortunately, a general lack of knowledge by investors and their advisers (including many well-known law firms) has led to rightful allowances being lost, forever! Some commentators on this subject, yes there are a few, have predicted litigation at some point in the not too distant future for malpractice, but ultimately, whether this happens or not, it appears there is an absence of a duty of care.
In conclusion, if you are a property investor or provide legal advice on a property deal, do yourselves a favour and get an expert opinion. It doesn’t have to be Gateley Capitus, although bear in mind we don’t charge for initial advice and we have one of the most experienced teams around, but do speak to a specialist. It could end up costing a lot more than a five minute chat.