Solicitors

SolicitorsOn the acquisition or disposal of second hand property, solicitors are responsible for asking and replying to Commercial Property Standard Enquiries in relation to capital allowances. What is less clear is where their responsibilities end in interpreting and actioning the answers to those enquiries. Unless specifically excluded from their terms of engagement, as per the dicta in the Hurlingham Estates v Wilde & Partners case, solicitors have an implied duty of care to advise their clients on capital allowances and if not, they must have a very clear understanding of where that duty of care lies and inform their clients accordingly.

Before the introduction of Finance Act 2012, if a solicitor acting on behalf of either a seller or buyer did not adequately address capital allowances and the sale and purchase contract was silent on the issue, this could result in a distinct advantage for the buyer. However, after 31 March 2014, if that situation occurred, the exact opposite would be the case.

For transactions after 31 March 2014 there is a distinct probability that no capital allowances would be available for the buyer whatsoever if appropriate steps are not taken prior to the exchange of contracts.

This “all or nothing” situation places a huge burden on the solicitor to get it right – a burden they may not even be aware of. Time and time again we come across inadequately answered Replies to Enquiries.

From 1 April 2014, there is no further margin for error in respect of this issue – the seller’s capital allowances position must be properly established and the sale and purchase contract must preserve entitlement for the buyer to claim capital allowances otherwise potentially huge amounts of tax relief may be lost.

Capitus have a complete range of services designed to assist solicitors with all of the capital allowances situations that they will encounter on any property transaction. Contact Aubrey Calderwood for an initial “no obligation”, discussion on calderwood@capitus.co.uk

 

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