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THE TIME BOMB OF LITIGATION CASES HAS STARTED...
See what the leading legal journals are saying...
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to defuse potential
It is important to realise that the new law on Capital Allowances was brought in under transitional arrangements in 2012 (part of the Finance Act of Parliament 2012).
Those transitional arrangements ended with the new law coming into full effect April 5th 2014. Therefore the legal profession has had over 3 years to be ready for the implications of the new law and its effect on clients (sales /purchaser) and the consequences of lack of duty of care claims, against the practices.
The recent Law Society report is very critical of its own members saying, “Very few commercial property transactions giving rise to Capital Allowances appear to be in line with best practice”. The report asks the question, “We instruct a Capital Allowance specialist”, only 2% say they do, and yet the last question in the CPSE.1 form Section 32 asks for the contact details of the Capital Allowance advisor to obtain the details of this enquiry (transaction)”.
There is now a real sense of urgency needed by all solicitors involved in commercial property transactions to protect their practice against “the wave upon wave of litigation as disappointed tax payers seek retribution from their professional advisors”.
It is worth remembering that if the CPSE.1 form Section 32 isn’t filled in correctly then both parties can lose all the Capital Allowances available to them, which could be a serious financial loss.
Capital Allowances and the risk to solicitors, accountants, IFA’s or surveyors. August 2015.
“There will be wave upon wave of litigation as disappointed tax payers seek retribution from their advisors (solicitors, accountants or surveyors) whom they hold responsible for their loss of Capital Allowance tax relief on their commercial property purchases.”
“Legal profession in denial of Capital Allowances. There is a worrying level of confusion among solicitors in their approach towards Capital Allowances, which could leave them open to risks ranging from loss of income to client complaints and litigation.”
The Law Society
“Many in the profession are not fully up to speed with their new obligations and are exposing themselves to risks and loss of fee income and litigation.”
Their recent survey showed that 95% of their members are not engaging in best practice.
The Law Society Gazette
“Commercial property lawyers warned over Capital Allowance changes.”
“They could face further action for negligence if they fail to properly advise clients on the tax relief changes.”
“When accountants are being sued successfully for amounts as much as £1.4 million, such as in the recent MEHJOO v HARBEN BARKER case, for not bringing in a specialist at the right time, a full review of your clients’ buildings may not only benefit them but save your practice further down the line.
Legalease Law Journal
“In many cases Capital Allowances will be lost, this means the importance of solicitors investing sufficient clauses into the sale and purchase agreement to protect their clients’ financial interests is significantly higher. Not doing this effectively could result in a loss and could even amount to a breach of contract.”
Q. How does your firm ensure accurate completion of Section 32?
(Please select all that apply)
We ask the client to instruct an accountant - 64%
We ask the client to instruct a Capital Allowance specialist? - 43%
We alert the client to do it but do not get involved? - 27%
We have developed in-house knowledge? - 14%
We use standard guidance from HMRC - 8%
We instruct an accountant? - 7%
We use standard guidance from other providers? - 65%
We instruct a Capital Allowance specialist? - 2%
Other? - 3%
Don’t know? - 8%
(Capital Allowance Report 2015)
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