Red Dot advised the client that there was an opportunity to maximise income tax savings on the integral fixtures and fittings within the fabric of the building. This was something the client was unaware of.

The tax saving arises from additional tax relief claimed called Capital Allowances. These are not normally available on property, but can be claimed on fixtures within the building itself. In order to quantify this it is necessary to undertake a detailed survey of the building to identify those integral fixtures within the building which can be claimed. This is a very specialised area so we introduced our client to a Capital Allowances specialist from our network of trusted professionals.

In this instance, the work had to be completed within a very tight deadline of two weeks in order to make full advantage of the tax savings for our client. Normally our consultants charge a fee based on a proportion of the savings, but in this case due to the deadline they worked on a fixed fee.

Our client was sceptical at first, and was reluctant to incur costs of over £2,000 with no guarantee of savings. From our experience we knew that whilst the quantity of savings could not be predicted with any certainty we were confident the client would make savings in excess of the costs.

Our client trusted us and authorised the work to proceed.

The end result was that we were able to make tax savings totalling in excess of £40,000 – a great result for our client and a real buzz to us that our client’s trust in us paid off so well.

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Red Dot recommended the transfer of the business from a Partnership to a Limited Company. The client’s previous accountant advised the client that this was not possible, so our client was understandably sceptical that we could do this.

We could understand why the previous accountant had taken the stance that they did, because this was a very complex process due to the valuations of the assets and ages of the Partners. During our work, Red Dot had to consider the implications on Income Tax, Corporation Tax, Capital Gains Tax, Value Added Tax, and Stamp Duty Land Tax, as well as Company Law requirements.

The end result was that we were able to incorporate the business, with the right structure for allowing future succession plans to be achieved, and obtain significant reductions in the tax liabilities – savings which the client immediately used to renovate many of the rooms in the Hotel.

We have experience of incorporating many businesses but this was the most complex and challenging we have undertaken. Our work was completed with the support of specialist tax and legal expertise from our network of trusted professionals, and our persistence and desire to help our client.

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