Navigating choppy waters

Our property tax specialists have worked through the many challenges posed by the pandemic while continuing to evaluate, evolve and enhance opportunities both for our business and our diverse client base.

Capital allowances, Land Remediation Tax Relief (LRTR), Structures and Building Allowances (SBAs) and the Community Infrastructure Levy (CIL) remained core service lines with several landmark ‘wins’ for clients.

Throughout 2021 we have run a series of practical property taxation webinars focusing on problem solving the tax issues faced by our clients, prospects and their project advisers.

Alun Oliver FRICS, E³ Managing Director, said: Alun Oliver FRICS, E³ Managing Director, said: “Very few businesses, investors and property professionals have found the past year plain sailing.  However, tax rebates and/or tax savings can considerably improve cash flows making businesses far more capable of sustaining themselves or facilitating new investment.  Yet there have been positives to be drawn from the way we, and our clients, have steered a path through the challenges with a positive and ‘can do’ approach.”

“This resilience and effective communication have resulted in stronger relationships and continued successful outcomes - as well as growth in new clients and opportunities for further innovation.  Undoubtedly there will be more obstacles ahead.  But all of us at E³ are looking forward to 2022 with confidence – in helping our clients new and existing - prosper from their property activities.”

Each week we have had up to ten or twelve new enquiries about the much-misunderstood Community Infrastructure Levy (CIL) leading to a record number of projects in 2021. 

The year also brought the near-highest annual CIL fees for E³ in its history.  Although sadly we are unable to help everyone, as many project situations cannot be rectified within the CIL Regulations.

There were some notable successes in complicated cases, including a Reg.114 Appeal win to overturn a £22,000 bill levied by a local authority on a farmer-owner in Surrey related to change of use of an ancillary outbuilding.  

Amongst others, we also successfully saved a Wiltshire householder £6,000 in CIL and penalty charges over change of use of an outbuilding/garage to self-contained annex.

Clear themes emerged from our CIL work in 2021 – many people did not realise advice was available or even that money could be saved until it was too late.  

It is very likely the vast majority simply pay up without knowing there is help to check, validate or reduce the CIL imposed by the Local Planning Authority.

A staggering 75-80 per cent of enquiries came retrospectively, after the applicant found themselves in hot water.

Meanwhile our primary research revealed that over 70 per cent of Planning Inspectorate appeals against CIL failed.

The important lesson to be learned is that acting at an early stage to get the right advice will typically cost a fraction of the CIL surcharge and potentially save money as well as time, energy and anxiety.

CIL was explained in several of our webinars during the year, as was the Super-deduction enhancement to the UK’s capital allowances regime, which allows companies to reduce their tax bill by 130 per cent of the cost of investing in their Plant & Machinery assets.

One recent South Coast £15m office project, for an owner occupier resulted in tax savings in excess of £1.4m from the ‘accelerated’ capital allowances and a further £1.3m over time from the Structures & Buildings Allowances.

Alun also gave a presentation about Land Remediation Tax Relief as part of the RICS’ Mineral and Waste Management Conference focusing on the future of these sectors in the UK.  Leading to a couple of articles on LRTR also being published during the year.

Throughout these online sessions the focus was on demystifying, explaining and illuminating the finer details – and how the reliefs can be applied to save money.

One example of the value of instructing a specialist was E³’s success for a large regional housebuilder in fully optimising their Land Remediation Tax Relief on a project in Devon. 

Initial forecasts were for £75,000 to £120,000 of qualifying land remediation expenditure (QLRE) but once E³ reviewed all the various contract data - a total of £586,000 QLRE was identified – resulting tax savings of approximately £170,000. Illustrating the added value of a detailed specialist review, over systemised, but inaccurate ledger coding.

With the industry-wide focus on increased adoption of technology, such as Teams and Zoom, E³ has further experienced business benefits of embracing digitisation – which thankfully we had implemented prior to the first lock-down.

As well as the adoption of new technology, E³ has also stepped up its use and analysis of data to drive the business. 

Our new Business Analyst, Flo Bailey, has been leading on research since starting in May but has also been contributing to design, content creation and providing support across a wide range of business functions.

Flo said: “There’s a real culture of support and collaboration at E^3.

“When I first started, I was surprised at how my opinion was asked for and listened to. It was considered as valid as anyone else’s which made me feel very welcome and part of the team.

“There’s a great deal of variety in my job and I have experienced every part of E³, from surveys and data analysis to content creation and networking – all of which has given me a detailed insight into the business and helped my development and understanding.

“There’s a tremendous focus on communication and teamwork which makes me feel valued, supported and confident to contribute.”

E³ is now recruiting for two new positions – a Researcher and Data and Operations Administrator – to support our further growth.

Alun said: “There is a huge silent majority of businesses and private clients who fail to recognise the tax saving opportunities available.  They may just pay and grumble because no-one has explained the options available; or they may believe that there may not be enough value in a claim once consultants and other fees have been paid.  Frequently there is much more value to be gained and money saved than first thought.  There is no way of knowing until a claim is explored, which is why it is worth talking to a specialist who can investigate the finer detail and opportunities available.”

We are planning to hold more webinars (as well as in-person seminars) in 2022 – with further details posted to our website, as well as LinkedIn & Twitter in the New Year.  For more information about any of our specialist property tax services please do get in touch.