On 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 would usually result in a distinct advantage for the buyer. However, from 1 April 2014, if that situation occurred, the exact opposite would be the case and it may result in no capital allowances being available for the buyer whatsoever.
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 replies must be right and the sale and purchase contract must reflect their content otherwise potentially huge amounts of tax relief may be lost.
Accredited by the Law Society to train solicitors on capital allowances, Capitus has unrivalled experience in this area and offer services to solicitors which will completely discharge their responsibilities to their clients in relation to this very onerous piece of legislation.
To arrange a bespoke training session qualifying for CPD and accredited by the Law Society or to obtain our Finance Act 2012 guidance pack for solicitors please contact Aubrey Calderwood at firstname.lastname@example.org