On 31 May 2011, HM Revenue & Customs (“HMRC”) published a consultation paper proposing changes to the capital allowances rules on expenditure on fixtures. HMRC make two proposals in the consultation paper.

The first is that businesses are obliged to notify HMRC of expenditure on fixtures in a building within a short period (suggesting either one or two years as a suitable period) of incurring the expenditure/acquiring the property in order to be able to claim capital allowances on that expenditure.

The second proposal is that, the buyer and seller of a building including fixtures will be required to agree the amount of the sale price attributable to the fixtures and notify this to HMRC within a similar time scale.

Currently, there is effectively no time limit, provided the asset is still owned and used in the business. The consultation paper invites comments on the proposals and views on other ways in which the capital allowances rules on fixtures could be improved. The closing date for comments was 31 August 2011. Draft legislation is expected to be published later in the year to be included in the Finance Bill 2012 with effect from April 2012. We have spoken to HMRC who were not able to provide further detail as to the current timetable as to when the draft legislation will be published.

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