With a view to helping the company fund its proposed investment, the KPMG tax team suggested a review to see whether all the tax reliefs available on the money that had been spent on investment to date had been claimed.
A burgeoning business had started by opening three restaurants. Business was good and the chain wanted to expand on its success.
Right from the start, it was clear to us that some items had been missed from the tax calculation. From our initial assessment we were confident there was a benefit for the company in us re-visiting the capital allowances claims.
Why were we able to uncover extra savings? The foundation of our capital allowances team is tax experts who have deep working knowledge of capital allowances claims and sectoral experience, in this case in the restaurant trade. But the team also includes construction specialists, such as quantity surveyors, who understand the detail of construction contracts. We overlay the skill sets of the different professionals, first to understand the tax areas and building work, and second to consider the construction contract in detail to quantify the costs.
It was this second, vital factor that had been missing from the restaurant chain’s original capital allowances claims. Without reviewing the specialist building work in detail, reliefs that the company should have been claiming had been missed.
The upshot was that we were able to revisit and amend the previous two years’ capital allowances claims. A total of £65,000 was repayable immediately, with another £65,000 in tax cash savings due over the following three years through higher deductions.
The first-year deduction was particularly high as the company was able to claim accelerated relief for energy-efficient assets. These accelerated reliefs are part of incentives specifically introduced by the government to encourage investment in energy efficiency. Identifying the qualifying assets enabled us to help the company front-load its relief and get a real cash boost just when it made most difference to its expansion plans.
And the money could not have come at a better time. The savings represented money the company no longer had to borrow in order to finance its investment in new sites – business plans which it was able to execute with greater confidence, with a more accurate cashflow and budget in place.
The chain has subsequently opened several new sites, buoyed by the cash we were able to help them claim and plough back into their business – and by their knowledge of how to ensure they get the best reliefs available for their future investment.