Deloitte’s Gi³ UK Tax Depreciation team

Tax depreciation – focus on tax risk and data management

In recent years, there has been increased scrutiny of businesses’ tax profiles from both tax authorities and the markets.

In response, Boards are focused on monitoring and mitigating tax risk. Tax depreciation reliefs, such as capital allowances, provide a widely understood form of tax relief. They are supported by detailed legislation, case law, HM Revenue & Customs guidance and industry agreements and thus where claims are fully substantiated should not increase a business’s risk profile.

Businesses are also experiencing challenges with the systems and processes used to compute tax calculations.

Major capital projects often draw information from a variety of sources into the tax returns. Deloitte has a variety of solutions to help you efficiently manage and analyse data for tax depreciation calculations including a technology solution that facilitates a robust audit trail.

Effective management of data can also mean that tax teams have time to increase focus on value-add areas. For tax depreciation purposes, this could include consideration of tax incentives or the impact of new legislation, examples below.

Common tax incentives that may be available include:

• Announced in the March 2021 Budget, a 130% super-deduction for companies incurring expenditure on main rate plant or machinery, together with a 50% first year allowance for special rate expenditure.

• 100% relief for expenditure incurred on qualifying plant & machinery for businesses operating within the freeport sites.

• 100% relief, or tax credits for loss makers, for defined energy/water efficient assets (for expenditure to April 2020).

• 100% relief for assets used for R&D purposes.

• 150% relief, or tax credits for loss makers, for expenditure on the remediation of contaminated land.

• Structures and buildings allowances, potentially allowing businesses investing in commercial property to benefit from a tax deduction for the majority of their capital expenditure. There are of course some restrictions to this and reporting requirements that businesses need to manage.

How Deloitte can help

Deloitte’s Gi³ UK Tax Depreciation team has extensive experience in preparing capital allowances claims (which include a wide range of other tax reliefs) across all industries. Our dedicated team includes surveyors, engineers, tax specialist and accountants.

Each claim process is bespoke to the claimant company, and can depend on many factors such as industry sector, size, resources and existing systems. We work with businesses to prepare their claims, and ease the burden of the claim preparation process, while implementing the most relevant methodology.

The benefits we offer include:

Technical teams
Our team, which includes both tax technical and surveying credentials, has worked with clients in all sectors with many years of experience in the preparation of tax depreciation claims, giving us unrivalled technical expertise.

Technology enabled
We have developed analytical technology which facilitates the efficient preparation of claim documentation. This is particularly relevant for large data sets of repetitive annual expenditure.

Global reach
The international focus of our Gi³ practice helps our clients identify incentive opportunities on a global basis.