
A tax allegiance of companies
Introduction
Our client approached us while their company planned to build a structure outside of its commercial premises, which would aim to protect the premises from floods and prevent damage.
To do this, they should acquire land next to the building and incur demolition and construction costs.
The problem
The cost of this project was quite significant, it was therefore important for the company that they understood which reliefs were at their disposal.
They had read contradictory information on deductible costs of their commercial profits and wanted a professional opinion on what could be claimed.
They wanted to make sure that all relevant complaints could be made precisely on the company’s income tax return.
How we resolved it
We have examined the costs they were due to currency and applied them in accordance with relevant tax legislation.
There were different considerations to be examined, for example if the expenses were of capital or income, how expenses could be deducted and what benefits were at their disposal.
The result
It was concluded that in their situation, they could not deduce the cost of the land itself only on a future sale of this land. However, all construction and demolition costs could be eligible for building structures and allowances (which provides an annual deduction of 3% over the lifespan of the new structure).
This provided the customer with a certainty for his reports and the confidence he had maximized their potential savings.
Following steps
If you want more information on the tax relief of companies or any support with your tax requests, please contact us.