Case Study Flashcards
(30 cards)
What is a Forward Funding Agreement?
The Client / Investor pays the developer to carry out the construction works on their behalf through monthly / interim payments
When the Construction / Development is complete the property is handed back to the client
SDLT is only paid on the bare site value and not post develment
How does a Forward Funding Agreement affect a CA claim?
The Forward Funding Agreement does not affect how my client can claim CAs as they are still incurring the expenditure on their own construction of the care home but through the developer and they have the Freehold interest in the land
What is a Long Funding Lease?
As set out in S. 70A and the Finance Act 2006:
Pre 2006, the lessee could not claim PMA’s on a leased item, but if a person borrowed money to buy an asset, they could claim PMA’s which are very similar.
Post 2006, the lessee can claim PMAs on the asset if:
- The lease is finalised after 1 April 2006
- The lease term commences after 1 April 2006
How long is the lease for this property?
15 Year Lease with the Opco
How did you ensure your client had entitlement to claim?
Checked my client statisfied S. 11
Checked Land Registry that they owned the freehold
Checked Companies House and their Accounts to ensure they were in the UK Charge to Tax
If your client was the opco, how would this have changed what could be claimed as plant?
If my client was they potentially would have been able to claim CAs on the Construction/ Cat A, if the Propco had not claimed as per the Forward Funding rules
However the Opco can claim CAs on the Cat B fit out of the premises on the expenditure they incurred
You claimed FYA’s for background plant and machinery, did you make an allowance for non back ground plant and machinery?
My client provided the Cat A Fit out works
The tenant / Opco completed the Cat B works
Other than the background plant and machinery there were not any other assets of plant and machinery to consider
If there were, I would have treated them at the standard rates of relief for MP and SRP
What was CBRE’s role with the Tenant from your strucutre chart?
My role with the tenant was simply to arrange the survey
There was no contractual link
You have referenced SD, why have you not shown them on the Annual Cash flow?
The Cashflow shows both the Super-deduction and Full Expensing together in the FYA column
What is the average £/M2 to construct a care home?
Approximately £2,500 m2
Cost /bed of a care home?
Depends on the size of the care home and number of beds
The cost of this care home was £10.8m with 72 Beds which gives £150,000 per bed
SPON’s says anythign between £110,000 - £160,000
How much did the property cost roughly to build per m2?
£2,500 m2
What was the additional benefit of having the specification?
Specifications always help with providing more detail to assets to understanding what the costs are associated with
You mention that you requested the Final Account statement, what is the benefit of asking for this?
The Final Account Statement provides important information for the project:
- Type of Contract
- Date of Main Contract
- Contract Sum Total
- Variations
- Agreed Final Account
What is the purpose of undertaking a CA Survey?
To gain an understanding of the specifications and assets installed
To differentiate between Landlord and Tenant expenditure
What stops claims on residential dwellings?
The Dwelling House Restriction
S.35
What requirements were met to claim on the facility in its entirety?
My client owns the freehold interest in the land and incurred capital expenditure on the project as a whole
Satisfies S.11
What requirements were met to claim SBAs?
S.270CF - Exceptions for where the accommodation is provided with personal care for persons in need of personal care by reason of:
- Old age
- Disability
- Dependence on alcohol or drugs
- Mental disorders
Residential properties not qualifying for SBAs, except for Care Homes and Hotels
How did you ensure the property qulifies as a care home and not just a residential home?
Within the HMRC Manual (CA92800)
The level of “personal care” is important:
- Helping with personal hygiene
- Administering medicine
- Providing food
- Therapy / physiotherapy
What was the construction contract used on this development?
JCT Standard Form Contract
Traditional Procurement Route
Difference between the Business Use Test & Premises Test?
Explain both tests
Both tests are used to determine if an asset can qualify for plant and machinery or not
Did the cinema have any sound insulation? What pool would you claim sound insulation?
Yes, there was sound insulation around the cinema
Treated the sound insulation as MP
If it wasn’t a care home, what pool would you take the handrails in?
In a normal commercial or residential building the handrails would be SBAs
In a care home it is widely accepted in practice to take handrails as MP expenditure
Why did your client choose the construction contract they did?
The Traditional Procurement Route allowed the client to have control of the design elemet and insturct the best contractor for the job
The Standard form contract was used due to the level of detail from the client
