HM Revenue & Customs (HMRC) has initiated a correspondence campaign, sending letters to companies regarding their capital allowance claims, specifically the Annual Investment Allowance. These letters, while potentially raising concerns, shouldn’t necessarily spark alarm. Let’s delve into what these letters entail and how companies should respond.
Understanding the Purpose of the HMRC Letter:
Receiving a letter from HMRC regarding capital allowances doesn’t automatically imply wrongdoing. Instead, it serves as a proactive measure to prompt companies to review their Annual Investment Allowance (AIA) claims. The primary objective is to ensure that businesses haven’t exceeded the prescribed annual allowance, which currently stands at £1 million.
Annual Investment Allowance (AIA) Explained:
The AIA is a tax provision that allows for a 100% deduction on qualifying capital expenditures, up to the annual limit of £1 million. However, it’s crucial to note that this allowance is subject to specific conditions. Notably, companies under common control must apportion and share this limit among themselves.
Responding to the HMRC Letter:
Upon receiving the letter, the first step for companies is to conduct an internal review of their AIA claims. This review aims to verify that the correct amount of AIA has been claimed and that no overclaim has occurred. If an error is discovered, it should be rectified within 30 days from the date of the letter.
If the AIA claim is found to be accurate, it’s still imperative to communicate this confirmation to HMRC using the contact details provided in the letter. Failure to do so may prompt HMRC to initiate an enquiry, which could lead to unnecessary complications.
Seeking Professional Assistance:
Navigating the intricacies of capital allowances and tax compliance can be daunting for many businesses. If your company requires assistance in verifying its AIA claim or responding to the HMRC letter, seeking professional guidance is advisable.
Our Tax Advisory Team:
At Robson Laidler, we understand the complexities of tax regulations and are here to support your business through every step of the process. Our dedicated Tax Advisory team is equipped with the knowledge and expertise to assist you in reviewing your AIA claim and addressing any queries or concerns raised by HMRC.
Get in Touch:
Should you require assistance or clarification regarding your AIA claim or the HMRC letter, don’t hesitate to contact our Tax Advisory team. You can reach us via email at taxteam@robson-laidler.co.uk or by phone at 0191 2818191. We’re here to help ensure your compliance with tax regulations and safeguard your business’s financial well-being.