Updated: Jul 5, 2020
When one of the UK’s leading pub owners embarked on its biggest ever, market leading £300m+ capital investment programme across its 3,000 strong estate it needed a fresh approach that identified its qualifying expenditure efficiently and accurately for tax purposes.
How to cope with large volumes of project data?
Examining a large volume of construction projects for tax purposes can be complex and time consuming for any business. Construction projects are not designed for tax purposes and even the most sophisticated intelligent analysis tools require human input to cope with project anomalies and information variances in cost details.
Working in partnership with the company’s tax, finance and estates teams, Furasta Consulting was appointed to review its expenditure plans and identify the best approach for its capital allowances and related tax claims in line with the company’s approach to tax.
This meant getting to grips with large volumes of financial and cost data from different sources and formats and engaging with the right people across the business (including external advisors) in a way that didn’t disrupt or cause unnecessary burden.
Why use statistically based sampling?
Statistically based sampling meant that instead of having to analyse many hundreds of projects, detailed analysis was only needed for less than 50 for a solid reliable claim basis.
There were three key drivers behind the decision to use statistically based sampling:
there was a large enough number of properties overall from which to choose a sample;
analysing all properties would be a considerable burden for the business (even with smart analysis tools);
the nature of projects undertaken across the business was relatively similar, and atypical projects could be identified and treated separately.
Tax, surveying and statistical expertise
Following in-depth analysis and utilising our industry, tax, surveying and statistical expertise we were able to extrapolate tax claim percentages with the necessary confidence intervals to deliver both enhanced tangible cash savings and reduced analysis workload for the foreseeable future.
Capital allowances are the UK’s equivalent of tax depreciation for capital expenditure on property, plant or equipment. Like other forms of tax depreciation, the world over, a cost segregation exercise is needed to identify the relevant parts of a construction project so that the correct tax treatment can be assigned, and appropriate tax relief claimed.
Furasta’s approach is unique as it combines relevant tax, surveying and statistical skills under one roof.
If you would like to learn more about statistical based sampling as a basis for your capital allowances claims, or simply wish to speak to us about getting our expertise on your team, please do not hesitate to contact us.