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That shiny new surgery, refit, extension, or “we had to do it for compliance” upgrade might be doing more for HMRC than it’s doing for you. We’re joined by Chris Lonergan, a tax consultancy director with deep construction and quantity surveying experience, to unpack how UK dental principals can be far more tax-efficient with property spend, legally, using capital allowances that HMRC expects to see claimed.
We talk through why dental practice premises are often a huge slice of personal and business wealth, and why missed relief hits cash flow at exactly the moment you need it for financing, recruitment, equipment, and growth. Chris explains capital allowances in plain language, the difference between plant and machinery allowances and structures and buildings allowance, and the types of “integral features” that are frequently overlooked, from electrical systems and HVAC to fitted cabinetry, security, and access equipment.
You’ll also hear why timing matters: what to do before you complete a property purchase, when to bring in specialist support during a build or refurbishment, and how delayed claims can reduce how quickly you can use the relief. If you’ve spent serious money on a fit-out in the last few years, or you’re planning one now, this conversation gives you a practical framework to ask better questions and protect your returns.
———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
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Episode Transcript
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Dr James (01:43):
Welcome everybody to another webinar between myself
and my good friend, Mr.
Chris Lonergan, all about howyou can be as tax-efficient as
possible as a principal and itlegally and the oldest things
that we must do.
And we should not only shouldwe do it as uh as clinicians of
professionals that we must do,of course.
But here's the cool thing: there's a lot of HMRC approved (02:03):
undefined
stuff out there, and ourcompanies just don't have to
know that much about it, andthat's actually the whole entire
purpose of this webinar.
I'm gonna talk about somethingspecific called capital
allowances as well, but all ofthat juicy stuff to be discussed
in due course.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
(02:25):
Smart Money Members Club alsoincludes multiple mini courses
and webinar series on financefor dentists, including how to
become as tax efficient aspossible, as well as
understanding investing.
All of this content counts asverifiable CPD, and you can
download your certificates thereand then upon completion of
each lesson.
In addition to this, we alsoinclude a whopping 10% discount
(02:46):
on your dental indemnity and a5% discount on lab bills for
dental principals, amongst otherperks and discounts for
members.
Please use the link in thedescription to claim your
verifiable CPD for this episode.
Chris, how are you thisevening?
Chris (03:04):
I'm really good, thanks, James.
It's nice to see you again.
Dr James (03:08):
Good to see you.
By the way, Chris, I thinkyou're just on I think you're
just on screen share, Matt,right now, so it might be good
to just jump out just for twoseconds.
There we go.
Magic that's much better.
And then we can just jump in.
Chris (03:23):
I'm up in Glasgow today, James.
Wonderful.
And uh for once it's notraining, so it's a really good
evening.
Dr James (03:31):
Yeah, that's good news.
Turn up for the books inScotland, I suppose you could
say.
But yeah, no, good stuff,Chris.
Chris, uh obviously everybody'scoming along tonight, and they
all, you know, the purpose oftonight's webinar is to learn,
excuse me.
Oh, I thought I was gonnasneeze then.
Oh, geez, sorry, I thought Iwas gonna sneeze just then, but
it didn't quite happen.
The purpose of tonight'swebinar is to talk about how
we're gonna be as tax-friendlyas possible as principals.
(03:52):
So obviously, we want to jumpstraight in for the uh benefit
of everybody who's on thiswebinar.
We want to get straight tosubject matter and get cracking,
because a lot of the stuff isstuff that can allow you to say
five figures, six figures, evenseven figures sometimes whenever
it comes to dental practices.
But of course, there'll be twotypes of people in this webinar
tonight, Chris, the people whoknow of you and the people who
have yet to meet you.
Maybe it might be nice to justdo a little bit of an intro,
(04:13):
just a little bit of a hello,and then we can jump straight
into the webinar, thepresentation itself.
Chris (04:18):
Okay, I will do just that right now, James.
So my name's Lonigan.
I'm one of the directors of avery fast-growing tax
consultancy with offices inLondon, Manchester, and Glasgow,
which is where I'm sittingright now.
And um, my mission in life isto help people pay less tax,
(04:40):
legally pay less tax around umsomething which is either a
massive capital cost or amassive source of wealth for a
dental professional, which wouldbe their commercial property
from which they trade as adentist.
So that's that's about me.
Dr James (04:57):
Wonderful.
So yeah, I mean that is a goodintro to yourself, Chris.
And I suppose not seemsopportunity to in time to go
ahead and jump straight in withthe presentation, shall we?
Because everybody on here iseagerly uh anticipating how they
might go about being more taxefficient uh as principals,
which the majority of thisaudience here with us tonight,
of course, are okay.
Chris (05:18):
Now let me see if I can give this first time, James.
Can you just let me, my friend,know if you can see my slides
okay?
Yeah, we've got you 100%.
You've got me going.
Excuse me.
(05:39):
So once again, thank you verymuch for inviting me along,
James.
Uh really appreciate it.
It's really good to work withyou.
If you've got any questions ofyour own as we're going along,
just chuck them in.
I think this is the third thethird time we've done something
along these lines.
So far, it's always been veryenjoyable.
A lot of value for everybody.
(06:00):
So if you've got any questions,just um, as I say, jump in as
we go along.
So I want to talk today aboutelements of tax efficiency.
Um, if there are any questions,I guess we can field them at
the end, and James has a way oftracking them anyway, but I'll
take any questions at the end ofthis uh brief presentation.
(06:24):
As we said already, uh it'sorganized by James with me as
the guest speaker.
Um I shan't dally on this.
You know a little bit about me.
Um, I've been involved in taxplanning and tax efficiency for
around 30 years now in differentsorts of organizations and
different guises.
So I think have some thoughtsto offer on the subject.
(06:46):
Um, I like working withdentists, I like working with
medical people, I like workingwith people who put their own
money into um a business and tryand grow it and flourish.
Um, but mainly, and more thananything else, I like to help
people pay as little tax as theycan while staying within the
legislation that's available fortax reliefs in the preamble.
(07:12):
Um, we've been around the thebit that's new here is we've
been around for about nineyears.
We're currently about 80people.
Um, I've got a team that workswith dental practices and
medical practices, and I'mworking a lot at the moment with
principals who invest in theirbuildings, whether it's a
surgery or a clinic, whether asa leaseholder in a property or
(07:34):
as a freeholder in a property,um, which may either sit in the
um in their own personalownership um or within the
practice.
Um, so I'm working a lot withpeople who are making massive
investments in their uh premisesfor obvious reasons, which as
principals on this call you'llbe aware of.
(07:56):
But I think it's just worth umrestating some of those just to
make sure we're on the samepage.
Um, so I actually want to startquite high level and just talk
about some of the issues, veryhigh level of um that you face
when you're running a practice.
(08:17):
Um, I'm not going to talk aboutstrategic and market pressures
because you guys already knowthose and what's going on out
there in the market.
Um, operational challenges,well, stuff costs are going up
all the time, the cost ofeverything is going up on a
monthly basis, more regulation,more compliance.
I really want to focus what I'mtalking about on um financing
(08:42):
and cash flow, tax andinvestment efficiency, and how
in particular I can help peoplewith that, and in particular,
how um the massive investmentsthat you tend to make in your
commercial premises canmassively influence and improve
both your cash flow, yourfinancing, and your tax bills
(09:05):
and your return on investmentfor making capital investments
in your business.
Um so if I just focus onfinancing and cash flow for a
little while, uh again, just torestate, everybody on the call
knows that we have raisingoperational costs, uh, profit
margins are being squeezed, uh,cash flow management is becoming
increasingly important.
(09:25):
Tax is going only one way, andwill probably continue to go
only one way under any newadministration, and that's
really eating into our profits,which we either use to
distribute back into the companyfor growth, or to take
ourselves to increase our ownpersonal wealth.
Um, access to finance at goodrates is a little bit variable.
(09:47):
So, again, I've got thingswhich I can do that help improve
um a company's uh creditcreditworthiness um and cash
flow, which helps with financingsituations.
And clearly um there are alsoaspects of expanding and uh
either through organic methodsor through acquisition of other
(10:11):
practices where you need cash.
And what I'm about to talkabout today really helps you
with financing and cash flow.
Um, also want to talk a bitabout uh tax and investment
efficiency.
Now, again, this is a reallybig topic, and we could spend a
whole day or a whole week or awhole month talking about it.
I really want to home in onthings to do with capital
(10:32):
commitments and propertyinvestments and property tax
reliefs.
And I'll explain why in asecond.
Um, that's not to say thatother aspects of uh tax
planning, such as yourstructure, how you extract money
from the business, how you dopension planning, how you look
at succession, which you couldprobably roll all into.
(10:52):
How do you grow and protect andextract the wealth from your
business that you spend yourhard-earned money and your
hard-earned time working on?
But like I say, I really wantto focus on the capital
commitments that you make andinvestments in property and
property tax reliefs that reallyhelp in these areas for some
(11:13):
very good reasons.
Um, if I take capitalcommitments, uh as far as I'm
aware, every practice and everyprinciple will have a premises.
I mean, some people work aslocums, some people travel
around, um, but everybody needsa premises.
And to keep up with modern daylegislation and with what
(11:38):
clients want, clearly thereneeds to be a significant
investment on a regular basis inyour premises.
Um, in terms of significant, Ifrequently see my clients who
spend between half a millionpounds and 750,000 on a major
fit out or an extension orrefurbishment of their premises.
(11:58):
Again, just to keep current andkeep their customers happy.
And this is true whether you'releasing a building or owning
your own building, that there isgoing to be a significant
capital cost every now and then.
And you really owe it toyourselves to maximize the tax
relief available frominvestments in capital type
(12:21):
building work, which James hasmentioned earlier, are often
missed or misunderstood by ageneral-purpose um accountant.
So my job is to help youextract every single pound of
tax relief available fromcapital investments in
(12:41):
buildings, uh which willtherefore have a meaningful
impact on your cash flow,borrowing, ROI, and your ability
to invest and grow.
So whether you're a leaseholderor a freeholder, you've made a
big capital commitment and a bigum capital expenditure in your
(13:01):
premises and deserve to managethat as tax-sufficiently as
possible and get whatever taxreliefs are coming your way to
improve your financialsituation.
Um if we look for a second atum a principal of a firm who uh
(13:23):
owns their own property andtherefore is protecting their
own wealth, these are some statsthat I've pulled together from
working with dentists over theyears.
Um now there may be somevariances here, um, and these
are um averages and examplesrather than about individual
(13:43):
people, but what I see is thattypically between um 13 and 33
percent of the net wealth ofsomebody who owns their own
premises from which they tradeas a dental practice is tied up
in their surgery.
So um the question would be thedevil's advocate question would
(14:06):
be um is it worth spending timeand effort in um making sure
that you're protecting yourwealth in a highly um valuable
part of your wealth portfolioand taking advantage of any tax
reliefs available in an areawhich represents a sizable chunk
(14:31):
of your total wealth.
That's perhaps a stupidquestion, um, because I have
tens, if not hundreds, ofclients who are talking to me on
a regular basis about thisparticular thing and how, as
James mentioned earlier, capitalallowances can help people um
either manage their capitalexpenditure as tax-sufficiently
(14:51):
as possible and ultimately toprotect their own personal
wealth or the per or the wealthof their practice or their
company or however they'restructured to run their dental
practice.
So to place this in context abit further, um, if I was to ask
the group here, although I'mnot sure people can answer, um,
(15:13):
have you in the last five yearsdone any of the following seven
things?
Have you added a surgery,refurbished reception or
undertaken accessibility works?
Have you converted rooms?
Have you extended yourpractice?
Um, have you done if you'vedone any of these things, then
these will be trigger points forsignificant amounts of capital
(15:34):
expenditure and also significantamount of tax relief if you
know where to find it.
Um the last time I asked thisquestion in an open forum of
dental principles, um, at least50% of the audience put up their
hands and said they'd done oneof these things, and therefore
(15:57):
there was a big relevance towhat I'm just about to go into a
bit more detail.
So it's really all aboutthinking about have you spent
money on capital improvements,refurbishments, fit-outs, um, or
building works on yourpremises, and have you actually
managed to maximize the taxrelief available, which is very,
(16:22):
very substantial.
And I'll go into that in alittle bit more detail in a few
minutes.
Um James mentioned capitalallowances earlier.
The main mechanism forgenerating tax relief from
capital investments in propertyis through things called capital
allowances.
(16:42):
Um I mean you can either talkabout these really technically
or quite simply.
I prefer to talk about them ina more simple way, and that
capital allowances are justthere to reward investment in
capital projects or capitalexpenditure, particularly around
buildings.
(17:03):
Capital allowances generate taxrelief, which can either be
used by a company in terms ofcorporation tax relief or by an
individual or a partnership,whether it's a non-limited or
limited liability partnership toreduce income tax um
liabilities.
Um, capital allowances are partof the Capital Allowances Act
(17:26):
2001.
Um it's actually a very umbenign type set of legislation,
and HMRC is very keen for peopleto make capital allowances
claims on the basis that themore they stimulate investment
in commercial property, thehigher the tax take is in this
(17:47):
country.
I think for every hundredpounds spent on commercial
property in the UK, there'saround 18 or 19 pounds of tax
for the government, uh for theTreasury.
So it's clearly good businessfor them.
Um tax release available foranybody registered for UK tax,
(18:09):
whether it's an income taxpayeror a corporation taxpayer.
Um there are massive benefitsto game here, but this is not
some sort of tax evasion orJimmy Carl, go and get yourself
in trouble type tax planningscheme.
It's just solid tax planningusing legislation that is, if
(18:29):
anything, encouraged by HMRC.
Um as James has mentioned, um,a decent accountant can normally
claim capital allowances to dowith certain pieces of capital
equipment, which would be desksand tables, uh, lamps, chairs,
um, autoclaves, all these kindsof pieces of what I would call
(18:51):
loose items.
An accountant generally is notthat great or trained, in fact,
in maximizing the tax reefavailable from investments in
buildings.
Um, and I'll explain again in asecond why that's the case.
So our specialism is inclaiming capital allowances,
which reduce people's taxliability, to do with buying a
(19:15):
property or constructionexpenditure, which is going to
be building, bitting out,refurbishing, converting, or
extending a commercial propertyor andor a surgery or practice.
Um and the reason we are umaround is because maximising the
(19:36):
claims in building what in thebuilding world requires
specialist skills, whichtypically are those of a
quantity surveyor and a builderand a tax person, and to some
extent of a lawyer.
And it's very difficult to findthose skills in one person.
I just happen to I work a lotwith accountants where they have
(19:59):
a much deeper knowledge ofother aspects of tax planning in
partnership, normally, toaccompany their general tax
skills with our specialistskills that you get from working
in the construction world andtherefore having experiences
which are out with the normalset of experiences of a typical
accountant.
So it's a good symbiotic typerelationship.
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(22:08):
of this podcast.
Chris (22:32):
In other areas, these are all kind of things where you'd
expect a decent accountant toalready know how to maximize tax
relief.
And as I said just recently, umon a lot of the projects that I
work on, there is a cleardivision of labor, if you like,
between me and someone's firm ofaccountants.
(22:53):
And we just agree that thereare certain things where it
makes sense for an accountant tomaximize the uh tax relief
claim.
And there are certain areaswhere it makes sense for me to
do it.
I mean, I can do anything thatan accountant does, but more
often than not, um my clientshave agreed some sort of annual
(23:13):
tax planning or tax managementuh fee with their accountant,
and it doesn't make sense to payfor a specialist to do
something which can be donewithin an existing um kind of
budget with a firm ofaccountants.
Um if I look at uh the taxrelease available in a little
(23:33):
bit more detail, there arebasically three.
Um the first is called plantand machinery allowances, which
in my case are Is to do withitems that are integral to a
building.
So this would be electricalsystems, plumbing systems,
heating, ventilation, airconditioning systems, any fitted
(23:54):
items, fitted laboratory,furniture, fitted kitchens,
fitted bathrooms, CCTV, securitysystems, lifts, elevators,
access kind of equipment.
These are all what you wouldcall integral items of a
(24:15):
building where you need somespecialist skills to winkle out
the maximum value from theinvestment.
There are also other areas ofcapital expenditure, as I
mentioned, which are loosefittings and pieces of plant and
machinery, where any decentaccountant already has the
skills to maximize the taxrelief.
So if you look at a building,you've got the structure of a
(24:39):
building or the fabric of thebuilding, the shell of a
building, externals and thefoundations, that investment
qualifies for something calledstructures and buildings
allowances.
The actual embedded items,typically in the walls, floors,
and ceilings, and any fixturesand fixed items in the buildings
qualify for plant and machineryallowances.
(25:00):
And if you're looking at somekind of brownfield construction
or went into a building where,for example, there was asbestos
and you were encapsulating orgetting rid of the asbestos,
there's tax relief available forwhat's called remediation.
That is, um, getting run-downbuildings in a state which are
suitable for habitation.
(25:22):
Um, if you add all of theseallowances together, often the
total expenditure on a buildingum can be covered by them.
So if you spend, say, £50,000or £500,000 on a building,
typically there'll be tax reliefavailable on all of it.
It's just a question of how doyou maximize it and how do you
(25:43):
get the best um bang for yourbuck, if you like.
If I look quickly at a typicalproject, um, which is a real
project I did for a dentalpractice, um, they had an
architect come in and did quitea swanky design, um, spent quite
a lot of money with thearchitect.
The architect's fees becameeligible for tax relief.
(26:06):
Um, they spent some money witha structural engineer,
expenditure became eligible fortax relief.
Um, they bought a relativelydilapidated old Edwardian uh
building and then set aboutrefurbishing it and turned it
from pretty run-down um what hadbeen residential property into
(26:30):
a much nicer and much moremodern dental practice and spent
around 650,000, 700,000 poundsin the process.
So, this is a a real projectthat I I worked on with a real
client.
This was their approximatebudget for the refurbishment,
and you can see it's quite asubstantial um budget, and
(26:54):
you'll recognise all of thesethings from um either practices
that you've worked in orpractices that you own, or times
when you've made your ownexpenditure in some of the areas
that I mentioned earlier on inmy slides.
Um, total expenditure here wasI think around 550,600 in this
(27:15):
particular case.
Um, in fact, this is it.
This is the actual the figures.
Here, the um project cost,which is the capital expenditure
in the project, was 471,000,which was um in this case for a
limited company, so excludedVAT.
(27:37):
Um, there was around £264,000of plant and machinery
allowances and around £206,000of structure and billings
allowance.
There was a little bit wecouldn't claim on because there
were some items in the buildingwhich didn't qualify for tax
relief.
But as you can see, there'ssomething like 98 or 99% of the
(27:58):
capital cost here whichqualified for tax relief.
I mean, having tax relief isreally great and really useful.
It's more what the client didwith it that is um astonishing
to me, which uh looked at thiswas actually a client um who
(28:18):
still held his um practice uh asa private individual and in
fact still traded as a solepractitioner uh rather than in
any other structure.
So this chap was actuallypaying tax at 45% um and his
(28:39):
benefit from plant and machineryallowances in this case was
£118,000 of tax relief, uh,which he actually got back from
HMRC in the form of a chequebecause he'd carried out the
work last year and had paid hiscorporation tax, so was
(29:00):
eligible, sorry, paid his incometax, so was eligible for a tax
rebate, um, which he got backall in one year.
And out of an expenditure ofaround 470, they had around
£120,000 of um cash back, whichmade a big dent in the $470 that
(29:22):
he spent on this um projectwork.
So I've included some otherexamples down here.
The um value of the claim isthe same in each case.
I've just split it betweencorporation tax and income tax.
Um and as you can see,whichever way you cut it,
whichever way you look at it, onan investment of about 470, the
(29:45):
immediate tax benefit issignificant, between 50 and
119,000 pounds, depending on thetype of tax you pay and your
current financial situation.
That's from plant and machineryallowances.
Um, they can all be grabbed inone year typically.
The benefit from the structuraltype work um is still
(30:08):
significant, um, but that isavailable only on an annual
basis.
That is actually claimable at3% a year, so uh the tax saving
or the cash flow saving everyyear from this investment range
between about £1,000 and£2.75,000.
So, you know, as James wassaying, these are chunky figures
(30:33):
uh which I'm regularly workingon every week with clients, uh,
and they're getting massive,massive tax benefits from these
investments.
Um how capital allowances work,just briefly, is if you were to
take a practice with a turnoverof 1.2 million, typically you
(30:54):
should be making a tradingprofit at around 30%.
Um, if you were to invest incapital expenditure, then you
would also take um adepreciation charge to your PL.
Um to work out taxable profits,you need to add back
non-qualifying business expensesof which depreciation is
(31:16):
normally the biggest.
So in this case, the taxableprofit for this business was
£410,000.
It was a corporate, so the taxliability would have been
£102,000 and a half.
Um, capital allowances in thiscase was £100,000.
So the capital allowancesadjust the taxable profits and
(31:39):
reduce the tax savings that way.
So capital allowances are um abalance sheet item for those of
you who are savvy around um setsof accounts and they adjust
taxable profits.
Um they have no link to uhcapital gains tax if you sell a
property or corporation tax ifyou sell a property.
(32:02):
Um in fact, the more you cansort of get into capital
allowances, the better you'regoing to be off when you come to
sell a property if that's oneof your plans for the future,
um, because it will reduce yourtax bill on selling the
property.
So this is just a simplemechanism for how it works, it
adjusts taxable profit and thengenerally generates quite a
(32:27):
significant um tax saving.
So I've talked a bit aboutrefurbishing properties,
building properties.
Um, there are differentscenarios where you can claim um
tax relief.
Uh you can either buy aproperty, in which case that
transaction can unlock buriedtax relief in the property.
(32:49):
Uh, some really interestingscenarios are if you buy a
residential property, which thencomes into commercial purposes.
Um if you were to uh do a minorrefurbishment on a residential
property, which I I sometimessee, um around 20 to 25% of the
(33:12):
purchase price would beavailable in capital allowances
to reduce your tax liability.
Um, if there's a majorrefurbishment, then that figure
is normally modified by theamount of refurbishment um
carried out on the property.
Same is true if you buy aproperty from a non-taxpaying
entity.
So if you buy something from uhNHS, charity, pension fund,
(33:35):
SIP, then um, because onlytaxpayers can claim capital
allowances, uh it's a no-brainerthat if you're not a taxpayer,
you can't have claimed it.
So those allowancesautomatically transfer to the
new owner on purchasing theproperty.
Um, same is true if you were tobuy a property from a developer
or a builder.
Um, capital allowances onlyavailable on assets held as
(33:59):
fixed assets, which could beeither in leasehold or as um
freehold assets in land ofbuildings.
Um, developers and buildersgenerally hold buildings as
trading stock because it istheir business to build and sell
a property.
Therefore, they are deniedcapital allowances, and people
who buy the buildings from themqualify for the capital
(34:20):
allowances.
So if you're if ever to go andbuy, if you're able to instruct
a builder to go and build um asurgery for you, then all of
that money that you spend withthe builder on building the
surgery would automaticallyfloat over to you on uh
completion um following acapital ounces claim uh and
(34:43):
could be used for you as taxrelief um going forward.
There are some more complexscenarios as well, which if
anybody has either bought abuilding um relatively recently
or is looking at a buildingpurchase right now, I'd be very
happy to talk to them, very keento talk to them, in fact, just
to make sure that the legaldocuments in place, particularly
(35:06):
if you're buying a building atthe moment, are correctly set up
so that as the new owner youcan inherit all of the capital
allowances coming your way.
Um people often ask me aboutconstruction work, construction
claims.
Um having told them that thereare normally some time limits
(35:28):
around or some time implicationsaround buying properties, the
good news is um there is nothere are no time limits on
reviewing and analyzing andclaiming tax relief from what I
call historic capitalexpenditure, historical
construction work.
(35:48):
So um if you spent money overthe last couple of years on
capital works and it needs areview to see if it's been
maximized, um, there could be avery strong uh amount of tax
relief available from that.
Um if the work's been done twoor more years ago, there is
(36:09):
still normally a significantbenefit.
Um, the difference would bethat older work gets um relieved
a bit slower than um moremodern work.
Again, for those of you who areprincipals who do their
finances, you may have heard ofthings called annual investment
allowance for capitalinvestments on um property
(36:35):
equipment and the like.
Uh building expenditure clearlyqualifies for annual
investments allowance if you'vegot the headroom.
Um but annual investmentsallowance only applies to
relatively recent expenditure.
So expenditure done, say fiveyears ago, is still valuable to
claim, um, but would beavailable on what's called a
(36:55):
writing down basis.
Um, and obviously we would workout or we we we work out with
our clients before we go to umeither opposing or finalizing a
claim what the financial benefitis going to be and whether it's
worth doing.
Um sometimes it's not, and um,it's just worth having an
(37:18):
initial look to see what thebusiness case is for making um a
claim.
Again, and there's somethingburied in here which
differentiates me and my companyfrom an accountant.
Um, according to uh accountancygap, which is their legislation
on how they do sets ofaccounts, um, an accountant can
(37:40):
only claim couple ounces inareas where there is a
well-described and um easilybroken down uh invoice or set of
figures.
Um quite often I come acrosssituations where someone's
instructed a builder and there'ssay a five or six month
(38:00):
construction project, and at theend of each month the builder
submits um an interim invoice orinterim certificate, and it's
very, very difficult to itemizethe elements on that and make
sure they go into the rightcapital allowances buckets to um
attract the right that the bestcapital allowances um result.
Now, an accountant cannotlegitimately split out those
(38:25):
kind of costs because it'sagainst their rules as an
accountancy firm.
Uh being quantity surveyors, uhproject managers, and
construction guys, uh we areactually allowed to do things
which accountants aren't allowedto do, providing we can
demonstrate that we have thecorrect um construction
knowledge in our business.
(38:46):
So we do a lot of what arecalled apportionment type claims
where we can go and survey abuilding and work out the value
of particular assets orparticular pieces of capital
equipment in a building, whichagain um an accountant cannot do
unless they've been trained todo the kind of work which the
(39:07):
guys in my teams do.
So there are going to be lotsof situations where um we can do
things which cannot be done byan accountant.
That's not to say, well, I havea lot of my friends who are
accountants, I have a lot ofpeople I work with who are
accountants.
It's not to denigrate accountsat all.
It's just to say we havedifferent skills, and um more
often than not we end up workingin partnership with people to
(39:30):
make sure that the clientultimately gets the best um
results from working with us andwith their existing accountant.
So that that's it, James.
Quick whistle stop throughquiz, quick whistle stop through
capital allowances.
And um, if you or anybody elsehave got any questions, please
(39:52):
let me know.
Dr James (39:55):
Yes, well, first and foremost, Chris, thank you for
sharing that.
Because this is how can I saythis?
It's this is something that Ireally feel that nationally in
the world of dentistry andperhaps other industries or
spheres as well, that there is ahuge flipping reservoir of
(40:15):
unclaimed uh allowances in thesedental practices because uh
because, as you were sayingearlier, to actually identify
these things requires such a newset of skills.
It's beyond the remit of whatcan typically be achieved uh via
a traditional account.
Don't get me wrong, a lot ofthem will have a stab at it, but
how well can they do it?
(40:37):
And to me, the thing that yousaid to me once upon a time was
that you used to be a builder,um, effective, or you used to be
a was it that you were abuilder, Chris, or you were a
foreman on a building site, oryou had some sort of involvement
on the building trade.
What's what's site builders?
Yeah, there you go.
I used to build things.
(40:57):
Yeah, well, there you go, right.
And um obviously you'veactually seen what goes on
literally behind the drywallsand stuff like that, you know.
So and is this is it is thatfair to say that this helps you
and what you do now?
Chris (41:11):
Oh, massively.
The thing that the thing thathelps me the most, James, is um
having been involved in doingquantity surveying.
Um because if if you if if youput somebody, I mean, I'm
sitting in a room now inGlasgow, um, and it's a room
which is maybe 20 feet long anduh 12 to 13 feet wide.
(41:35):
And um if you gave me 15minutes, I could tell you how
much it costs to build thatroom, how much the lighting cost
would have been, how much theplumbing cost would have been,
uh, how much the doors andwindows would have cost to put
that room together.
Um and that's the basis ofdoing a couple allowances claim.
(41:56):
But the the only way you can dothat is if you've been involved
in building.
You can if if you go to uh atax a tax accountant and say,
can you work out the value ofthings in that room?
They go, Well, not really, it'snot what I do.
So it's just a very, verydifferent skill set.
Dr James (42:13):
Sure.
And that's not to diminishaccountants, but it's a bit like
saying 100%.
It's a bit it's a bit likesaying, to put it in dental
terms, it's a bit like saying adent, there's a de, you know, uh
you could you could have adentist who can do a filling,
but they've never actuallylooked into someone's mouth,
right?
Like you gotta have that skill.
And you could you couldprobably describe a filling, you
(42:33):
could probably describe howit's done, but maybe you just
haven't actually seen itfirsthand.
Uh, and it always gives you anextra level of insight when
you've done something like that.
So I just it just I wasbringing that up because I found
it interesting, and I was like,right, well, why is this not as
successful as it should be toeverybody out there?
And then when you put it inthose terms that always stuck
out of my memory, but I don'tthink you I'm not sure we
(42:55):
mentioned that, guys.
One thing I should say.
Um, basically, if anybody's gotany questions, feel free to pop
those in chat.
Now it's a great opportunity toask Chris even about your own
dental practice or specificthings that you've noticed or
specific things that you'd likea little bit of insight on.
So wonderful opportunity to beable to do that before we uh
wrap this up, wrap up thisevening.
We should be good, we should goon for another 10 minutes or
so.
Uh, and just while everybody'sthinking of their questions, I
(43:17):
might just bring up a few thingsas well, Chris, for the benefit
of the audience, so that weknow that we can get the
absolute most out of yourexpertise this evening.
So, Chris, obviously, wheneveryou help dental practice, uh,
whenever we help them withcapital allowances and reducing
their tax bill and tax rebatesand everything along those
lines, what would you say thethree most common things?
Well, it doesn't have to bethree, you know, four, five,
(43:38):
whatever, two, even two, orwhatever you fancy, just uh
there's just there's no criteriaper se.
Other than that, if you couldtell us what are the most common
things that dentists have notyet claimed that are absolutely
massive needle shifters uh interms of in terms of massive
potential to be able to uhreduce the corporate tax bill or
(44:00):
to historically claim backsomething that they haven't yet
claimed in order to reduce theirtax bill going forwards, what
would those be?
Chris (44:07):
Well, in if I take equipment to one side, James,
things like dental equipment toone side, um I I see a lot of
missed opportunity aroundelectrical systems in a
business, whether it's lighting,heating, power.
(44:27):
Uh I see a lot of um missedopportunities, and also that
would include CCTV and securityand cabling and other kinds of
electrical systems in thebuilding.
I see a lot of um missedopportunity there.
I see a lot of opportunitymissed around access equipment,
(44:48):
whether it's lifts or hoists, umor equipment for less able type
people.
Um I see a lot of missedopportunity around bespoke
fitted uh items like cabinetry,um toilets, kitchens,
(45:10):
receptions, bathrooms.
These are some of the big areaswhere I see a lot of missed
opportunity.
I I see an I don't thinkdetail, but I I see um well I'll
I'll be honest and say I I Ipicked up the capital allowances
claim done by an accountantlast week.
(45:31):
Okay.
And uh there are three bucketsthat you can put capital
allowances into.
There's what's called the Mainpool where you get very, very
fast tax relief, the specialpool where you get slightly
slower tax relief, andstructures and buildings
(45:52):
allowance.
And this chap had completelymisclassified uh a lot of the
expenditure in this building.
Um and he'd stuck a lot ofthings which um well he just put
things in shouldn't shouldn'treally talk too much about him.
(46:12):
He just puts him things in thewrong bucket, and as a
consequence, uh the tax returnfor his client the tax return
for his client was all wrong.
I mean he'd done he made thebest, he kind of made the best
efforts based on his knowledge,but the tax return was all
(46:34):
wrong, uh was wrong, and wecalculated between us that the
client had underpaid their taxbill by about £25,000.
Yeah.
Um now you have to make acommercial I hope you don't mind
me saying this, James, but youhave to make a commercial
decision at that point.
(46:54):
Um uh and the commercialdecision that the client made
was that he would rather notthink not have things done
properly and run the risk of a£25,000 uh tax bill with
penalties.
Um so all you can do is pointout things to people, you can't
(47:15):
make people uh change their uhchange their decisions.
But these are the kind ofthings that I see a lot where
there's a lot ofmisclassification, a lot of
missed opportunity.
Um and you know, uh uh a lot ofthe time um it doesn't really
make a massive difference, butsometimes it does.
(47:37):
And people still get inquiriesum and investigations around
their tax affairs, which wouldhave been sorted out better if
they had a specialist doing thiswork.
Dr James (47:50):
And maybe it's worth mentioning, Chris, that in that
one particular example they'dunderpaid, but the majority of
times that you look at people'stax situation, they've probably
overpaid, right?
Because they haven't classifiedthings correctly when it comes
to capital allowances.
Is that fair to say?
Chris (48:06):
Quite a lot of times they haven't they've overpaid their
tax because it's not beenpossible without specialist
skills to um extract the taxrelief from the capital
expenditure.
So it's just been sitting therein limbo um as a cost.
Whereas in fact it should havebeen there as a load of tax
(48:29):
relief available to the uminvestor.
Dr James (48:35):
Yes, of course.
No, I understood because I'veit's it's that seemed to be a
recurring theme from the casestudies, I guess, that you'd
explained to me beforehand andthat you and I have talked about
over the weeks, months, andyears and what have you.
But no, that's cool.
Interesting.
And then I was just I was justcurious to know as well, when do
you feel is a good opportunityto talk about these tax reliefs?
(48:58):
Because I actually was talkingto one of my friends the other
day, and he was like, Oh, um,I'm setting up a squat um and
I'm thinking about exploring thecapital allowances.
And he was like, But you knowwhat, let me just get the squad
up and running for a few yearsand then I'll think about it.
And I was like, What are youtalking about?
Like, like, surely, why wouldyou pay the tax just to have it
(49:19):
back again?
Like, surely it doesn't notmake sense to think about that
from the get-go.
Chris (49:23):
That doesn't make sense.
If you are if you're if you'relooking to buy a property,
whether it's um a propertyyou're going to repurpose or or
or a kind of property that'sgood to go in terms of a
surgery, uh, you you would wantsomebody to be involved in
looking at the capitalallowances position prior to
(49:47):
completion prior to completingthe purchase.
Okay.
Um if you were to uh if youwere thinking of doing some uh
building work of your own, uh uhmy recommendation would be to
speak to uh a capital allowancesexpert before you uh well after
you've appointed the builder,but before you start doing any
(50:09):
building work.
Um what I'm doing to mean say,I'm just about to spend a budget
of say 750,000 pounds on mypractice.
Um can you tell me what thecapital allowances are going to
be because that's going toimpact um my cash flow and you
know my financial metrics goingforward.
And I um it's great to know twoor three years down the line
(50:32):
that I've got some tax relief,but it's even better, it's even
better to know up front as partof my planning, so I can um work
out how best to finance ascheme.
So if you're planning on doingsomething, it's a good idea to
speak to somebody before youstart it.
Um if you've already startedsomething, then uh the best time
(50:54):
to speak to somebody, if it'sconstruction type work, is
shortly after the work'sfinished.
Um I think given that uh a lotmost building work will qualify
for either annual investmentallowance or full expensing from
a tax perspective, um it it itdoesn't make sense to wait three
(51:17):
or four years to do a capitalallowances claim because you
lose the ability to claim allthe allowances in one year.
Um and then you can only claimthem at about 10% a year over a
number of years.
So it's a bit of financial umbit of financial thinking here
because obviously on the onehand, um there are fees involved
(51:43):
in claiming capital allowances,um, which you need to uh be
prepared to spend.
And on the other hand, and andmaybe some people would argue
they should wait until they'reprofitable before they should um
either incur the fees or uhmake the claims.
Um and sometimes that's theright thing to do, but I I would
(52:07):
argue that if you can affordit, um you should make the claim
as soon as possible, becausethen you're in control of your
tax relief.
If you wait a few years to makethe claim, then you can only
claim the tax relief at the ratewhich HMRC lets you, and that's
lower than the rate which youcan use if you have kind of done
(52:28):
it right at the beginning.
Dr James (52:31):
If that's the same thing.
No, it does, it absolutelymakes sense.
And um, you know, actually,Chris, this is uh this is
actually my fault.
Uh what we should have done uhfor anybody who's on this
webinar, we're gonna do thisnow, just before we continue the
rest of our conversation.
For anybody who wants toconnect with Chris, uh what
we're gonna do very shortly,we're actually gonna pop a link
in the chat that you can use toregister your details if you
(52:54):
want Chris to high level take alook at your dental practice and
see whenever it comes to yourcapital allowances, as in just
your two cents and just forChris to cast his eye over it
and see if there's somethingthere.
And then that way, at least youknow for sure, you know what I
mean.
It's not in no way commits youto going down the path having to
do it.
Of course, the very first thingto figure out is can you
(53:14):
actually help somebody and thenyou take it from there?
At least you know the answeryes, you know for sure.
So we are gonna pop a link inthe chat for anybody who wants
to do that, give them uh youknow, give their dental
practice.
You'll also be able to connectwith Chris after this webinar uh
via email that we're gonna sendout as well, which will contain
the what you and the way thatyou so the individual who is
(53:37):
seen to be able to benefit,they'll only pay you out of the
profit that they make anyway, orthe tax that they would have
saved, if I got that right.
So they're always going to bethe winner and you've designed
it intentionally to be likethat.
Chris (53:46):
Basically, yes.
So it's uh we we we generallydon't charge any upfront fees,
James.
If we're looking if we'relooking at an initial review of
someone's situation, then wejust don't do that as part of
the project, and then we're veryhonest and we'll just say
whether there's anything thatlooks um attractive enough to
(54:07):
claim.
And then you're right,everything is based on a
percentage after that.
Dr James (54:17):
Yeah, that's I remember you telling that to me
as well, and that that kind ofstruck me too, basically.
And I guess that's what itmight be nice to do is skirted
over this earlier, but do youhave any case studies of Dennis
that you helped specifically allanonymized, of course, which is
(54:37):
20 years ago.
Orbit uh uh in his next taxreturn, something along those
lines.
Chris (54:49):
Of course I do.
The the the one where the thethe one I talked through where
um the guy had spent 470 on apractice is a real client where
he ended up with a check for£119,000 back from the revenue.
So I can that that's a summaryof a of a longer case study.
(55:10):
I've got plenty of them, James.
I've done a lot of work fordentists over the years.
Dr James (55:16):
Nice.
And then there was alsosomething I remember you saying
this on me, I think youmentioned it earlier, but I
think it's worth reiterating.
Uh, there's no, I don't know ifthis is the right terminology,
there's no statute oflimitations, if you will, as to
when you can claim these things.
If you have a practice that'sbuilt in the 60s and they've
been unclaimed, and the practicehas changed hands like three
(55:37):
times, but they've neveractually had their capital
allowances claimed property,then those pass on to the
current owner and they can claimthose retrospectively, uh,
despite it being a very longperiod of time elapsed since the
building was uh built.
Is that fair to say?
Chris (55:54):
Uh it's fair to say that sometimes they can and sometimes
they can't.
It's also fair to say that no,no, no, it's not it's not your
bad, it's just that um thereneeds to be some due diligence
carried out when you're whenyou're buying properties.
And again, the due diligencewhich we do to establish whether
(56:17):
there's a claim available issomething which um we do as the
initial assessment on theviability of a claim.
You keep cutting out on me,James.
Dr James (56:36):
Yes, still there.
Chris (56:38):
Sorry, I thought you you keep cutting out on me.
Um Alex Saunders has also.
Dr James (56:51):
Sincere apologies.
Let me just go ahead and um uhjump right over to that.
But yeah, just to round offwhat you were saying, Chris, on
the um just to round off on whatyou were saying, Chris.
Um am I right in saying that inprinciple it can be claimed a
very long, even if a practicewas built a very long time ago
historically, there's nothingthat rules that out.
(57:12):
Uh, but obviously it's on it inprinciple, but obviously it's
on a case-by-case basis.
Is that fair to say?
It is.
Chris (57:18):
In in for sure, if you've done um if you've carried out
refurbishment work or buildingwork or extension time work on a
property, there's no time limitat all.
Well, you know, go I mean youcan go back to 1776, James.
Although, to be fair, there'snot a lot going to be a lot left
(57:40):
from building work done 250years ago.
Um, you know, but no, you youcan go, you you can look back
into the past.
The only question, which againwe're very honest about, is if
we do an an initial assessment,which is free of charge, do the
initial assessment.
If it looks like it's not worthmaking the claim because the
(58:03):
annual amount of tax relief isgoing to be small, uh, we're
happy to do the initial reviewand be honest, and then allow
someone to make a choicethemselves as to whether it's
worth claiming.
Dr James (58:17):
Yeah, seriously to me.
Okay, Chris, is my connectionback a little bit?
Can you hear me?
Yeah, I can now.
Yeah, all right.
So it was just jumping in andout there a little bit, but I
think we're good now.
Okay, Alex is very patientlywaited uh with his question here
in the chat.
So let me just go ahead andread this out and then we'll
probably call time andproceedings this evening, Chris.
Uh, because we are coming up tohalf eight, and we do like to
(58:39):
keep these webinars powerful uhand succinct.
So Alex has said, so just toconfirm, your company works
alongside our currentaccountants.
Chris (58:51):
Yes.
Normally, yes.
Yes, um if if I can be honestand say it depends how good your
accountant is.
Some sometimes we doeverything, but more often than
not, we have a conversation, asensible conversation with an
accountant, and we workalongside them.
We don't offer we we don't doaccounts and we don't do audits
(59:19):
and we don't do all of thosestandard things that an
accounting firm would do.
We're as you said, James, we'rea niche practice and we focus
on one highly specialist thing,uh, which generally a firm of
accountants and won't have thepeople internally to do
themselves.
Dr James (59:37):
Lovely, Jovely.
Well, thank you for clearingthat one up, Chris Alex.
Hopefully that's the that'scleared up your your question
right there.
Uh, Chris, seems like a goodtime now to call time on
proceedings, just as I wassaying a second ago.
Guys, to the audience who arewith us, thank you so much for
coming along this evening.
Should you wish to connect withChris, there's a link there in
the chat.
We'll also send another linkafter this webinar via email as
(01:00:01):
well.
Chris is happy to give yourdental practice the once over,
see if there's an opportunitythere to be able to make some
sort of uh saving on tax orindeed tax rebate, of course.
Chris, I think it's only politethat I uh lead the clap, the
clap up.
Uh I'm clapping right now, youcan't see me because my hands
are just below the camera.
Uh the clap up on behalf of theDennis Investor Audience this
(01:00:22):
evening for sharing your time,wisdom, and knowledge.
So I just want to just say ahuge thank you on that one for
giving up your Wednesday to comeand talk to us as ever.
Guys, to everybody who's onthis webinar, thank you once
again for attending.
Congrats on attending on thesewebinars every two, three weeks,
something along those lines inthe Dennis Investor audience.
So I should be able to make anannouncement about the next one
very soon.
In the meantime, hope everybodyhas a lovely Wednesday evening
(01:00:45):
and we'll talk soon.
Cheers, bye bye.
Bye bye.
Welcome everybody to another webinar between myself
and my good friend, Mr.
Chris Lonergan, all about howyou can be as tax-efficient as
possible as a principal and itlegally and the oldest things
that we must do.
And we should not only shouldwe do it as uh as clinicians of
professionals that we must do,of course.
But here's the cool thing: there's a lot of HMRC approved (02:03):
undefined
stuff out there, and ourcompanies just don't have to
know that much about it, andthat's actually the whole entire
purpose of this webinar.
I'm gonna talk about somethingspecific called capital
allowances as well, but all ofthat juicy stuff to be discussed
in due course.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
(02:25):
Smart Money Members Club alsoincludes multiple mini courses
and webinar series on financefor dentists, including how to
become as tax efficient aspossible, as well as
understanding investing.
All of this content counts asverifiable CPD, and you can
download your certificates thereand then upon completion of
each lesson.
In addition to this, we alsoinclude a whopping 10% discount
(02:46):
on your dental indemnity and a5% discount on lab bills for
dental principals, amongst otherperks and discounts for
members.
Please use the link in thedescription to claim your
verifiable CPD for this episode.
Chris, how are you thisevening?
Chris (03:04):
I'm really good, thanks, James.
It's nice to see you again.
Dr James (03:08):
Good to see you.
By the way, Chris, I thinkyou're just on I think you're
just on screen share, Matt,right now, so it might be good
to just jump out just for twoseconds.
There we go.
Magic that's much better.
And then we can just jump in.
Chris (03:23):
I'm up in Glasgow today, James.
Wonderful.
And uh for once it's notraining, so it's a really good
evening.
Dr James (03:31):
Yeah, that's good news.
Turn up for the books inScotland, I suppose you could
say.
But yeah, no, good stuff,Chris.
Chris, uh obviously everybody'scoming along tonight, and they
all, you know, the purpose oftonight's webinar is to learn,
excuse me.
Oh, I thought I was gonnasneeze then.
Oh, geez, sorry, I thought Iwas gonna sneeze just then, but
it didn't quite happen.
The purpose of tonight'swebinar is to talk about how
we're gonna be as tax-friendlyas possible as principals.
(03:52):
So obviously, we want to jumpstraight in for the uh benefit
of everybody who's on thiswebinar.
We want to get straight tosubject matter and get cracking,
because a lot of the stuff isstuff that can allow you to say
five figures, six figures, evenseven figures sometimes whenever
it comes to dental practices.
But of course, there'll be twotypes of people in this webinar
tonight, Chris, the people whoknow of you and the people who
have yet to meet you.
Maybe it might be nice to justdo a little bit of an intro,
(04:13):
just a little bit of a hello,and then we can jump straight
into the webinar, thepresentation itself.
Chris (04:18):
Okay, I will do just that right now, James.
So my name's Lonigan.
I'm one of the directors of avery fast-growing tax
consultancy with offices inLondon, Manchester, and Glasgow,
which is where I'm sittingright now.
And um, my mission in life isto help people pay less tax,
(04:40):
legally pay less tax around umsomething which is either a
massive capital cost or amassive source of wealth for a
dental professional, which wouldbe their commercial property
from which they trade as adentist.
So that's that's about me.
Dr James (04:57):
Wonderful.
So yeah, I mean that is a goodintro to yourself, Chris.
And I suppose not seemsopportunity to in time to go
ahead and jump straight in withthe presentation, shall we?
Because everybody on here iseagerly uh anticipating how they
might go about being more taxefficient uh as principals,
which the majority of thisaudience here with us tonight,
of course, are okay.
Chris (05:18):
Now let me see if I can give this first time, James.
Can you just let me, my friend,know if you can see my slides
okay?
Yeah, we've got you 100%.
You've got me going.
Excuse me.
(05:39):
So once again, thank you verymuch for inviting me along,
James.
Uh really appreciate it.
It's really good to work withyou.
If you've got any questions ofyour own as we're going along,
just chuck them in.
I think this is the third thethird time we've done something
along these lines.
So far, it's always been veryenjoyable.
A lot of value for everybody.
(06:00):
So if you've got any questions,just um, as I say, jump in as
we go along.
So I want to talk today aboutelements of tax efficiency.
Um, if there are any questions,I guess we can field them at
the end, and James has a way oftracking them anyway, but I'll
take any questions at the end ofthis uh brief presentation.
(06:24):
As we said already, uh it'sorganized by James with me as
the guest speaker.
Um I shan't dally on this.
You know a little bit about me.
Um, I've been involved in taxplanning and tax efficiency for
around 30 years now in differentsorts of organizations and
different guises.
So I think have some thoughtsto offer on the subject.
(06:46):
Um, I like working withdentists, I like working with
medical people, I like workingwith people who put their own
money into um a business and tryand grow it and flourish.
Um, but mainly, and more thananything else, I like to help
people pay as little tax as theycan while staying within the
legislation that's available fortax reliefs in the preamble.
(07:12):
Um, we've been around the thebit that's new here is we've
been around for about nineyears.
We're currently about 80people.
Um, I've got a team that workswith dental practices and
medical practices, and I'mworking a lot at the moment with
principals who invest in theirbuildings, whether it's a
surgery or a clinic, whether asa leaseholder in a property or
(07:34):
as a freeholder in a property,um, which may either sit in the
um in their own personalownership um or within the
practice.
Um, so I'm working a lot withpeople who are making massive
investments in their uh premisesfor obvious reasons, which as
principals on this call you'llbe aware of.
(07:56):
But I think it's just worth umrestating some of those just to
make sure we're on the samepage.
Um, so I actually want to startquite high level and just talk
about some of the issues, veryhigh level of um that you face
when you're running a practice.
(08:17):
Um, I'm not going to talk aboutstrategic and market pressures
because you guys already knowthose and what's going on out
there in the market.
Um, operational challenges,well, stuff costs are going up
all the time, the cost ofeverything is going up on a
monthly basis, more regulation,more compliance.
I really want to focus what I'mtalking about on um financing
(08:42):
and cash flow, tax andinvestment efficiency, and how
in particular I can help peoplewith that, and in particular,
how um the massive investmentsthat you tend to make in your
commercial premises canmassively influence and improve
both your cash flow, yourfinancing, and your tax bills
(09:05):
and your return on investmentfor making capital investments
in your business.
Um so if I just focus onfinancing and cash flow for a
little while, uh again, just torestate, everybody on the call
knows that we have raisingoperational costs, uh, profit
margins are being squeezed, uh,cash flow management is becoming
increasingly important.
(09:25):
Tax is going only one way, andwill probably continue to go
only one way under any newadministration, and that's
really eating into our profits,which we either use to
distribute back into the companyfor growth, or to take
ourselves to increase our ownpersonal wealth.
Um, access to finance at goodrates is a little bit variable.
(09:47):
So, again, I've got thingswhich I can do that help improve
um a company's uh creditcreditworthiness um and cash
flow, which helps with financingsituations.
And clearly um there are alsoaspects of expanding and uh
either through organic methodsor through acquisition of other
(10:11):
practices where you need cash.
And what I'm about to talkabout today really helps you
with financing and cash flow.
Um, also want to talk a bitabout uh tax and investment
efficiency.
Now, again, this is a reallybig topic, and we could spend a
whole day or a whole week or awhole month talking about it.
I really want to home in onthings to do with capital
(10:32):
commitments and propertyinvestments and property tax
reliefs.
And I'll explain why in asecond.
Um, that's not to say thatother aspects of uh tax
planning, such as yourstructure, how you extract money
from the business, how you dopension planning, how you look
at succession, which you couldprobably roll all into.
(10:52):
How do you grow and protect andextract the wealth from your
business that you spend yourhard-earned money and your
hard-earned time working on?
But like I say, I really wantto focus on the capital
commitments that you make andinvestments in property and
property tax reliefs that reallyhelp in these areas for some
(11:13):
very good reasons.
Um, if I take capitalcommitments, uh as far as I'm
aware, every practice and everyprinciple will have a premises.
I mean, some people work aslocums, some people travel
around, um, but everybody needsa premises.
And to keep up with modern daylegislation and with what
(11:38):
clients want, clearly thereneeds to be a significant
investment on a regular basis inyour premises.
Um, in terms of significant, Ifrequently see my clients who
spend between half a millionpounds and 750,000 on a major
fit out or an extension orrefurbishment of their premises.
(11:58):
Again, just to keep current andkeep their customers happy.
And this is true whether you'releasing a building or owning
your own building, that there isgoing to be a significant
capital cost every now and then.
And you really owe it toyourselves to maximize the tax
relief available frominvestments in capital type
(12:21):
building work, which James hasmentioned earlier, are often
missed or misunderstood by ageneral-purpose um accountant.
So my job is to help youextract every single pound of
tax relief available fromcapital investments in
(12:41):
buildings, uh which willtherefore have a meaningful
impact on your cash flow,borrowing, ROI, and your ability
to invest and grow.
So whether you're a leaseholderor a freeholder, you've made a
big capital commitment and a bigum capital expenditure in your
(13:01):
premises and deserve to managethat as tax-sufficiently as
possible and get whatever taxreliefs are coming your way to
improve your financialsituation.
Um if we look for a second atum a principal of a firm who uh
(13:23):
owns their own property andtherefore is protecting their
own wealth, these are some statsthat I've pulled together from
working with dentists over theyears.
Um now there may be somevariances here, um, and these
are um averages and examplesrather than about individual
(13:43):
people, but what I see is thattypically between um 13 and 33
percent of the net wealth ofsomebody who owns their own
premises from which they tradeas a dental practice is tied up
in their surgery.
So um the question would be thedevil's advocate question would
(14:06):
be um is it worth spending timeand effort in um making sure
that you're protecting yourwealth in a highly um valuable
part of your wealth portfolioand taking advantage of any tax
reliefs available in an areawhich represents a sizable chunk
(14:31):
of your total wealth.
That's perhaps a stupidquestion, um, because I have
tens, if not hundreds, ofclients who are talking to me on
a regular basis about thisparticular thing and how, as
James mentioned earlier, capitalallowances can help people um
either manage their capitalexpenditure as tax-sufficiently
(14:51):
as possible and ultimately toprotect their own personal
wealth or the per or the wealthof their practice or their
company or however they'restructured to run their dental
practice.
So to place this in context abit further, um, if I was to ask
the group here, although I'mnot sure people can answer, um,
(15:13):
have you in the last five yearsdone any of the following seven
things?
Have you added a surgery,refurbished reception or
undertaken accessibility works?
Have you converted rooms?
Have you extended yourpractice?
Um, have you done if you'vedone any of these things, then
these will be trigger points forsignificant amounts of capital
(15:34):
expenditure and also significantamount of tax relief if you
know where to find it.
Um the last time I asked thisquestion in an open forum of
dental principles, um, at least50% of the audience put up their
hands and said they'd done oneof these things, and therefore
(15:57):
there was a big relevance towhat I'm just about to go into a
bit more detail.
So it's really all aboutthinking about have you spent
money on capital improvements,refurbishments, fit-outs, um, or
building works on yourpremises, and have you actually
managed to maximize the taxrelief available, which is very,
(16:22):
very substantial.
And I'll go into that in alittle bit more detail in a few
minutes.
Um James mentioned capitalallowances earlier.
The main mechanism forgenerating tax relief from
capital investments in propertyis through things called capital
allowances.
(16:42):
Um I mean you can either talkabout these really technically
or quite simply.
I prefer to talk about them ina more simple way, and that
capital allowances are justthere to reward investment in
capital projects or capitalexpenditure, particularly around
buildings.
(17:03):
Capital allowances generate taxrelief, which can either be
used by a company in terms ofcorporation tax relief or by an
individual or a partnership,whether it's a non-limited or
limited liability partnership toreduce income tax um
liabilities.
Um, capital allowances are partof the Capital Allowances Act
(17:26):
2001.
Um it's actually a very umbenign type set of legislation,
and HMRC is very keen for peopleto make capital allowances
claims on the basis that themore they stimulate investment
in commercial property, thehigher the tax take is in this
(17:47):
country.
I think for every hundredpounds spent on commercial
property in the UK, there'saround 18 or 19 pounds of tax
for the government, uh for theTreasury.
So it's clearly good businessfor them.
Um tax release available foranybody registered for UK tax,
(18:09):
whether it's an income taxpayeror a corporation taxpayer.
Um there are massive benefitsto game here, but this is not
some sort of tax evasion orJimmy Carl, go and get yourself
in trouble type tax planningscheme.
It's just solid tax planningusing legislation that is, if
(18:29):
anything, encouraged by HMRC.
Um as James has mentioned, um,a decent accountant can normally
claim capital allowances to dowith certain pieces of capital
equipment, which would be desksand tables, uh, lamps, chairs,
um, autoclaves, all these kindsof pieces of what I would call
(18:51):
loose items.
An accountant generally is notthat great or trained, in fact,
in maximizing the tax reefavailable from investments in
buildings.
Um, and I'll explain again in asecond why that's the case.
So our specialism is inclaiming capital allowances,
which reduce people's taxliability, to do with buying a
(19:15):
property or constructionexpenditure, which is going to
be building, bitting out,refurbishing, converting, or
extending a commercial propertyor andor a surgery or practice.
Um and the reason we are umaround is because maximising the
(19:36):
claims in building what in thebuilding world requires
specialist skills, whichtypically are those of a
quantity surveyor and a builderand a tax person, and to some
extent of a lawyer.
And it's very difficult to findthose skills in one person.
I just happen to I work a lotwith accountants where they have
(19:59):
a much deeper knowledge ofother aspects of tax planning in
partnership, normally, toaccompany their general tax
skills with our specialistskills that you get from working
in the construction world andtherefore having experiences
which are out with the normalset of experiences of a typical
accountant.
So it's a good symbiotic typerelationship.
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of this podcast.
Chris (22:32):
In other areas, these are all kind of things where you'd
expect a decent accountant toalready know how to maximize tax
relief.
And as I said just recently, umon a lot of the projects that I
work on, there is a cleardivision of labor, if you like,
between me and someone's firm ofaccountants.
(22:53):
And we just agree that thereare certain things where it
makes sense for an accountant tomaximize the uh tax relief
claim.
And there are certain areaswhere it makes sense for me to
do it.
I mean, I can do anything thatan accountant does, but more
often than not, um my clientshave agreed some sort of annual
(23:13):
tax planning or tax managementuh fee with their accountant,
and it doesn't make sense to payfor a specialist to do
something which can be donewithin an existing um kind of
budget with a firm ofaccountants.
Um if I look at uh the taxrelease available in a little
(23:33):
bit more detail, there arebasically three.
Um the first is called plantand machinery allowances, which
in my case are Is to do withitems that are integral to a
building.
So this would be electricalsystems, plumbing systems,
heating, ventilation, airconditioning systems, any fitted
(23:54):
items, fitted laboratory,furniture, fitted kitchens,
fitted bathrooms, CCTV, securitysystems, lifts, elevators,
access kind of equipment.
These are all what you wouldcall integral items of a
(24:15):
building where you need somespecialist skills to winkle out
the maximum value from theinvestment.
There are also other areas ofcapital expenditure, as I
mentioned, which are loosefittings and pieces of plant and
machinery, where any decentaccountant already has the
skills to maximize the taxrelief.
So if you look at a building,you've got the structure of a
(24:39):
building or the fabric of thebuilding, the shell of a
building, externals and thefoundations, that investment
qualifies for something calledstructures and buildings
allowances.
The actual embedded items,typically in the walls, floors,
and ceilings, and any fixturesand fixed items in the buildings
qualify for plant and machineryallowances.
(25:00):
And if you're looking at somekind of brownfield construction
or went into a building where,for example, there was asbestos
and you were encapsulating orgetting rid of the asbestos,
there's tax relief available forwhat's called remediation.
That is, um, getting run-downbuildings in a state which are
suitable for habitation.
(25:22):
Um, if you add all of theseallowances together, often the
total expenditure on a buildingum can be covered by them.
So if you spend, say, £50,000or £500,000 on a building,
typically there'll be tax reliefavailable on all of it.
It's just a question of how doyou maximize it and how do you
(25:43):
get the best um bang for yourbuck, if you like.
If I look quickly at a typicalproject, um, which is a real
project I did for a dentalpractice, um, they had an
architect come in and did quitea swanky design, um, spent quite
a lot of money with thearchitect.
The architect's fees becameeligible for tax relief.
(26:06):
Um, they spent some money witha structural engineer,
expenditure became eligible fortax relief.
Um, they bought a relativelydilapidated old Edwardian uh
building and then set aboutrefurbishing it and turned it
from pretty run-down um what hadbeen residential property into
(26:30):
a much nicer and much moremodern dental practice and spent
around 650,000, 700,000 poundsin the process.
So, this is a a real projectthat I I worked on with a real
client.
This was their approximatebudget for the refurbishment,
and you can see it's quite asubstantial um budget, and
(26:54):
you'll recognise all of thesethings from um either practices
that you've worked in orpractices that you own, or times
when you've made your ownexpenditure in some of the areas
that I mentioned earlier on inmy slides.
Um, total expenditure here wasI think around 550,600 in this
(27:15):
particular case.
Um, in fact, this is it.
This is the actual the figures.
Here, the um project cost,which is the capital expenditure
in the project, was 471,000,which was um in this case for a
limited company, so excludedVAT.
(27:37):
Um, there was around £264,000of plant and machinery
allowances and around £206,000of structure and billings
allowance.
There was a little bit wecouldn't claim on because there
were some items in the buildingwhich didn't qualify for tax
relief.
But as you can see, there'ssomething like 98 or 99% of the
(27:58):
capital cost here whichqualified for tax relief.
I mean, having tax relief isreally great and really useful.
It's more what the client didwith it that is um astonishing
to me, which uh looked at thiswas actually a client um who
(28:18):
still held his um practice uh asa private individual and in
fact still traded as a solepractitioner uh rather than in
any other structure.
So this chap was actuallypaying tax at 45% um and his
(28:39):
benefit from plant and machineryallowances in this case was
£118,000 of tax relief, uh,which he actually got back from
HMRC in the form of a chequebecause he'd carried out the
work last year and had paid hiscorporation tax, so was
(29:00):
eligible, sorry, paid his incometax, so was eligible for a tax
rebate, um, which he got backall in one year.
And out of an expenditure ofaround 470, they had around
£120,000 of um cash back, whichmade a big dent in the $470 that
(29:22):
he spent on this um projectwork.
So I've included some otherexamples down here.
The um value of the claim isthe same in each case.
I've just split it betweencorporation tax and income tax.
Um and as you can see,whichever way you cut it,
whichever way you look at it, onan investment of about 470, the
(29:45):
immediate tax benefit issignificant, between 50 and
119,000 pounds, depending on thetype of tax you pay and your
current financial situation.
That's from plant and machineryallowances.
Um, they can all be grabbed inone year typically.
The benefit from the structuraltype work um is still
(30:08):
significant, um, but that isavailable only on an annual
basis.
That is actually claimable at3% a year, so uh the tax saving
or the cash flow saving everyyear from this investment range
between about £1,000 and£2.75,000.
So, you know, as James wassaying, these are chunky figures
(30:33):
uh which I'm regularly workingon every week with clients, uh,
and they're getting massive,massive tax benefits from these
investments.
Um how capital allowances work,just briefly, is if you were to
take a practice with a turnoverof 1.2 million, typically you
(30:54):
should be making a tradingprofit at around 30%.
Um, if you were to invest incapital expenditure, then you
would also take um adepreciation charge to your PL.
Um to work out taxable profits,you need to add back
non-qualifying business expensesof which depreciation is
(31:16):
normally the biggest.
So in this case, the taxableprofit for this business was
£410,000.
It was a corporate, so the taxliability would have been
£102,000 and a half.
Um, capital allowances in thiscase was £100,000.
So the capital allowancesadjust the taxable profits and
(31:39):
reduce the tax savings that way.
So capital allowances are um abalance sheet item for those of
you who are savvy around um setsof accounts and they adjust
taxable profits.
Um they have no link to uhcapital gains tax if you sell a
property or corporation tax ifyou sell a property.
(32:02):
Um in fact, the more you cansort of get into capital
allowances, the better you'regoing to be off when you come to
sell a property if that's oneof your plans for the future,
um, because it will reduce yourtax bill on selling the
property.
So this is just a simplemechanism for how it works, it
adjusts taxable profit and thengenerally generates quite a
(32:27):
significant um tax saving.
So I've talked a bit aboutrefurbishing properties,
building properties.
Um, there are differentscenarios where you can claim um
tax relief.
Uh you can either buy aproperty, in which case that
transaction can unlock buriedtax relief in the property.
(32:49):
Uh, some really interestingscenarios are if you buy a
residential property, which thencomes into commercial purposes.
Um if you were to uh do a minorrefurbishment on a residential
property, which I I sometimessee, um around 20 to 25% of the
(33:12):
purchase price would beavailable in capital allowances
to reduce your tax liability.
Um, if there's a majorrefurbishment, then that figure
is normally modified by theamount of refurbishment um
carried out on the property.
Same is true if you buy aproperty from a non-taxpaying
entity.
So if you buy something from uhNHS, charity, pension fund,
(33:35):
SIP, then um, because onlytaxpayers can claim capital
allowances, uh it's a no-brainerthat if you're not a taxpayer,
you can't have claimed it.
So those allowancesautomatically transfer to the
new owner on purchasing theproperty.
Um, same is true if you were tobuy a property from a developer
or a builder.
Um, capital allowances onlyavailable on assets held as
(33:59):
fixed assets, which could beeither in leasehold or as um
freehold assets in land ofbuildings.
Um, developers and buildersgenerally hold buildings as
trading stock because it istheir business to build and sell
a property.
Therefore, they are deniedcapital allowances, and people
who buy the buildings from themqualify for the capital
(34:20):
allowances.
So if you're if ever to go andbuy, if you're able to instruct
a builder to go and build um asurgery for you, then all of
that money that you spend withthe builder on building the
surgery would automaticallyfloat over to you on uh
completion um following acapital ounces claim uh and
(34:43):
could be used for you as taxrelief um going forward.
There are some more complexscenarios as well, which if
anybody has either bought abuilding um relatively recently
or is looking at a buildingpurchase right now, I'd be very
happy to talk to them, very keento talk to them, in fact, just
to make sure that the legaldocuments in place, particularly
(35:06):
if you're buying a building atthe moment, are correctly set up
so that as the new owner youcan inherit all of the capital
allowances coming your way.
Um people often ask me aboutconstruction work, construction
claims.
Um having told them that thereare normally some time limits
(35:28):
around or some time implicationsaround buying properties, the
good news is um there is nothere are no time limits on
reviewing and analyzing andclaiming tax relief from what I
call historic capitalexpenditure, historical
construction work.
(35:48):
So um if you spent money overthe last couple of years on
capital works and it needs areview to see if it's been
maximized, um, there could be avery strong uh amount of tax
relief available from that.
Um if the work's been done twoor more years ago, there is
(36:09):
still normally a significantbenefit.
Um, the difference would bethat older work gets um relieved
a bit slower than um moremodern work.
Again, for those of you who areprincipals who do their
finances, you may have heard ofthings called annual investment
allowance for capitalinvestments on um property
(36:35):
equipment and the like.
Uh building expenditure clearlyqualifies for annual
investments allowance if you'vegot the headroom.
Um but annual investmentsallowance only applies to
relatively recent expenditure.
So expenditure done, say fiveyears ago, is still valuable to
claim, um, but would beavailable on what's called a
(36:55):
writing down basis.
Um, and obviously we would workout or we we we work out with
our clients before we go to umeither opposing or finalizing a
claim what the financial benefitis going to be and whether it's
worth doing.
Um sometimes it's not, and um,it's just worth having an
(37:18):
initial look to see what thebusiness case is for making um a
claim.
Again, and there's somethingburied in here which
differentiates me and my companyfrom an accountant.
Um, according to uh accountancygap, which is their legislation
on how they do sets ofaccounts, um, an accountant can
(37:40):
only claim couple ounces inareas where there is a
well-described and um easilybroken down uh invoice or set of
figures.
Um quite often I come acrosssituations where someone's
instructed a builder and there'ssay a five or six month
(38:00):
construction project, and at theend of each month the builder
submits um an interim invoice orinterim certificate, and it's
very, very difficult to itemizethe elements on that and make
sure they go into the rightcapital allowances buckets to um
attract the right that the bestcapital allowances um result.
Now, an accountant cannotlegitimately split out those
(38:25):
kind of costs because it'sagainst their rules as an
accountancy firm.
Uh being quantity surveyors, uhproject managers, and
construction guys, uh we areactually allowed to do things
which accountants aren't allowedto do, providing we can
demonstrate that we have thecorrect um construction
knowledge in our business.
(38:46):
So we do a lot of what arecalled apportionment type claims
where we can go and survey abuilding and work out the value
of particular assets orparticular pieces of capital
equipment in a building, whichagain um an accountant cannot do
unless they've been trained todo the kind of work which the
(39:07):
guys in my teams do.
So there are going to be lotsof situations where um we can do
things which cannot be done byan accountant.
That's not to say, well, I havea lot of my friends who are
accountants, I have a lot ofpeople I work with who are
accountants.
It's not to denigrate accountsat all.
It's just to say we havedifferent skills, and um more
often than not we end up workingin partnership with people to
(39:30):
make sure that the clientultimately gets the best um
results from working with us andwith their existing accountant.
So that that's it, James.
Quick whistle stop throughquiz, quick whistle stop through
capital allowances.
And um, if you or anybody elsehave got any questions, please
(39:52):
let me know.
Dr James (39:55):
Yes, well, first and foremost, Chris, thank you for
sharing that.
Because this is how can I saythis?
It's this is something that Ireally feel that nationally in
the world of dentistry andperhaps other industries or
spheres as well, that there is ahuge flipping reservoir of
(40:15):
unclaimed uh allowances in thesedental practices because uh
because, as you were sayingearlier, to actually identify
these things requires such a newset of skills.
It's beyond the remit of whatcan typically be achieved uh via
a traditional account.
Don't get me wrong, a lot ofthem will have a stab at it, but
how well can they do it?
(40:37):
And to me, the thing that yousaid to me once upon a time was
that you used to be a builder,um, effective, or you used to be
a was it that you were abuilder, Chris, or you were a
foreman on a building site, oryou had some sort of involvement
on the building trade.
What's what's site builders?
Yeah, there you go.
I used to build things.
(40:57):
Yeah, well, there you go, right.
And um obviously you'veactually seen what goes on
literally behind the drywallsand stuff like that, you know.
So and is this is it is thatfair to say that this helps you
and what you do now?
Chris (41:11):
Oh, massively.
The thing that the thing thathelps me the most, James, is um
having been involved in doingquantity surveying.
Um because if if you if if youput somebody, I mean, I'm
sitting in a room now inGlasgow, um, and it's a room
which is maybe 20 feet long anduh 12 to 13 feet wide.
(41:35):
And um if you gave me 15minutes, I could tell you how
much it costs to build thatroom, how much the lighting cost
would have been, how much theplumbing cost would have been,
uh, how much the doors andwindows would have cost to put
that room together.
Um and that's the basis ofdoing a couple allowances claim.
(41:56):
But the the only way you can dothat is if you've been involved
in building.
You can if if you go to uh atax a tax accountant and say,
can you work out the value ofthings in that room?
They go, Well, not really, it'snot what I do.
So it's just a very, verydifferent skill set.
Dr James (42:13):
Sure.
And that's not to diminishaccountants, but it's a bit like
saying 100%.
It's a bit it's a bit likesaying, to put it in dental
terms, it's a bit like saying adent, there's a de, you know, uh
you could you could have adentist who can do a filling,
but they've never actuallylooked into someone's mouth,
right?
Like you gotta have that skill.
And you could you couldprobably describe a filling, you
(42:33):
could probably describe howit's done, but maybe you just
haven't actually seen itfirsthand.
Uh, and it always gives you anextra level of insight when
you've done something like that.
So I just it just I wasbringing that up because I found
it interesting, and I was like,right, well, why is this not as
successful as it should be toeverybody out there?
And then when you put it inthose terms that always stuck
out of my memory, but I don'tthink you I'm not sure we
(42:55):
mentioned that, guys.
One thing I should say.
Um, basically, if anybody's gotany questions, feel free to pop
those in chat.
Now it's a great opportunity toask Chris even about your own
dental practice or specificthings that you've noticed or
specific things that you'd likea little bit of insight on.
So wonderful opportunity to beable to do that before we uh
wrap this up, wrap up thisevening.
We should be good, we should goon for another 10 minutes or
so.
Uh, and just while everybody'sthinking of their questions, I
(43:17):
might just bring up a few thingsas well, Chris, for the benefit
of the audience, so that weknow that we can get the
absolute most out of yourexpertise this evening.
So, Chris, obviously, wheneveryou help dental practice, uh,
whenever we help them withcapital allowances and reducing
their tax bill and tax rebatesand everything along those
lines, what would you say thethree most common things?
Well, it doesn't have to bethree, you know, four, five,
(43:38):
whatever, two, even two, orwhatever you fancy, just uh
there's just there's no criteriaper se.
Other than that, if you couldtell us what are the most common
things that dentists have notyet claimed that are absolutely
massive needle shifters uh interms of in terms of massive
potential to be able to uhreduce the corporate tax bill or
(44:00):
to historically claim backsomething that they haven't yet
claimed in order to reduce theirtax bill going forwards, what
would those be?
Chris (44:07):
Well, in if I take equipment to one side, James,
things like dental equipment toone side, um I I see a lot of
missed opportunity aroundelectrical systems in a
business, whether it's lighting,heating, power.
(44:27):
Uh I see a lot of um missedopportunities, and also that
would include CCTV and securityand cabling and other kinds of
electrical systems in thebuilding.
I see a lot of um missedopportunity there.
I see a lot of opportunitymissed around access equipment,
(44:48):
whether it's lifts or hoists, umor equipment for less able type
people.
Um I see a lot of missedopportunity around bespoke
fitted uh items like cabinetry,um toilets, kitchens,
(45:10):
receptions, bathrooms.
These are some of the big areaswhere I see a lot of missed
opportunity.
I I see an I don't thinkdetail, but I I see um well I'll
I'll be honest and say I I Ipicked up the capital allowances
claim done by an accountantlast week.
(45:31):
Okay.
And uh there are three bucketsthat you can put capital
allowances into.
There's what's called the Mainpool where you get very, very
fast tax relief, the specialpool where you get slightly
slower tax relief, andstructures and buildings
(45:52):
allowance.
And this chap had completelymisclassified uh a lot of the
expenditure in this building.
Um and he'd stuck a lot ofthings which um well he just put
things in shouldn't shouldn'treally talk too much about him.
(46:12):
He just puts him things in thewrong bucket, and as a
consequence, uh the tax returnfor his client the tax return
for his client was all wrong.
I mean he'd done he made thebest, he kind of made the best
efforts based on his knowledge,but the tax return was all
(46:34):
wrong, uh was wrong, and wecalculated between us that the
client had underpaid their taxbill by about £25,000.
Yeah.
Um now you have to make acommercial I hope you don't mind
me saying this, James, but youhave to make a commercial
decision at that point.
(46:54):
Um uh and the commercialdecision that the client made
was that he would rather notthink not have things done
properly and run the risk of a£25,000 uh tax bill with
penalties.
Um so all you can do is pointout things to people, you can't
(47:15):
make people uh change their uhchange their decisions.
But these are the kind ofthings that I see a lot where
there's a lot ofmisclassification, a lot of
missed opportunity.
Um and you know, uh uh a lot ofthe time um it doesn't really
make a massive difference, butsometimes it does.
(47:37):
And people still get inquiriesum and investigations around
their tax affairs, which wouldhave been sorted out better if
they had a specialist doing thiswork.
Dr James (47:50):
And maybe it's worth mentioning, Chris, that in that
one particular example they'dunderpaid, but the majority of
times that you look at people'stax situation, they've probably
overpaid, right?
Because they haven't classifiedthings correctly when it comes
to capital allowances.
Is that fair to say?
Chris (48:06):
Quite a lot of times they haven't they've overpaid their
tax because it's not beenpossible without specialist
skills to um extract the taxrelief from the capital
expenditure.
So it's just been sitting therein limbo um as a cost.
Whereas in fact it should havebeen there as a load of tax
(48:29):
relief available to the uminvestor.
Dr James (48:35):
Yes, of course.
No, I understood because I'veit's it's that seemed to be a
recurring theme from the casestudies, I guess, that you'd
explained to me beforehand andthat you and I have talked about
over the weeks, months, andyears and what have you.
But no, that's cool.
Interesting.
And then I was just I was justcurious to know as well, when do
you feel is a good opportunityto talk about these tax reliefs?
(48:58):
Because I actually was talkingto one of my friends the other
day, and he was like, Oh, um,I'm setting up a squat um and
I'm thinking about exploring thecapital allowances.
And he was like, But you knowwhat, let me just get the squad
up and running for a few yearsand then I'll think about it.
And I was like, What are youtalking about?
Like, like, surely, why wouldyou pay the tax just to have it
(49:19):
back again?
Like, surely it doesn't notmake sense to think about that
from the get-go.
Chris (49:23):
That doesn't make sense.
If you are if you're if you'relooking to buy a property,
whether it's um a propertyyou're going to repurpose or or
or a kind of property that'sgood to go in terms of a
surgery, uh, you you would wantsomebody to be involved in
looking at the capitalallowances position prior to
(49:47):
completion prior to completingthe purchase.
Okay.
Um if you were to uh if youwere thinking of doing some uh
building work of your own, uh uhmy recommendation would be to
speak to uh a capital allowancesexpert before you uh well after
you've appointed the builder,but before you start doing any
(50:09):
building work.
Um what I'm doing to mean say,I'm just about to spend a budget
of say 750,000 pounds on mypractice.
Um can you tell me what thecapital allowances are going to
be because that's going toimpact um my cash flow and you
know my financial metrics goingforward.
And I um it's great to know twoor three years down the line
(50:32):
that I've got some tax relief,but it's even better, it's even
better to know up front as partof my planning, so I can um work
out how best to finance ascheme.
So if you're planning on doingsomething, it's a good idea to
speak to somebody before youstart it.
Um if you've already startedsomething, then uh the best time
(50:54):
to speak to somebody, if it'sconstruction type work, is
shortly after the work'sfinished.
Um I think given that uh a lotmost building work will qualify
for either annual investmentallowance or full expensing from
a tax perspective, um it it itdoesn't make sense to wait three
(51:17):
or four years to do a capitalallowances claim because you
lose the ability to claim allthe allowances in one year.
Um and then you can only claimthem at about 10% a year over a
number of years.
So it's a bit of financial umbit of financial thinking here
because obviously on the onehand, um there are fees involved
(51:43):
in claiming capital allowances,um, which you need to uh be
prepared to spend.
And on the other hand, and andmaybe some people would argue
they should wait until they'reprofitable before they should um
either incur the fees or uhmake the claims.
Um and sometimes that's theright thing to do, but I I would
(52:07):
argue that if you can affordit, um you should make the claim
as soon as possible, becausethen you're in control of your
tax relief.
If you wait a few years to makethe claim, then you can only
claim the tax relief at the ratewhich HMRC lets you, and that's
lower than the rate which youcan use if you have kind of done
(52:28):
it right at the beginning.
Dr James (52:31):
If that's the same thing.
No, it does, it absolutelymakes sense.
And um, you know, actually,Chris, this is uh this is
actually my fault.
Uh what we should have done uhfor anybody who's on this
webinar, we're gonna do thisnow, just before we continue the
rest of our conversation.
For anybody who wants toconnect with Chris, uh what
we're gonna do very shortly,we're actually gonna pop a link
in the chat that you can use toregister your details if you
(52:54):
want Chris to high level take alook at your dental practice and
see whenever it comes to yourcapital allowances, as in just
your two cents and just forChris to cast his eye over it
and see if there's somethingthere.
And then that way, at least youknow for sure, you know what I
mean.
It's not in no way commits youto going down the path having to
do it.
Of course, the very first thingto figure out is can you
(53:14):
actually help somebody and thenyou take it from there?
At least you know the answeryes, you know for sure.
So we are gonna pop a link inthe chat for anybody who wants
to do that, give them uh youknow, give their dental
practice.
You'll also be able to connectwith Chris after this webinar uh
via email that we're gonna sendout as well, which will contain
the what you and the way thatyou so the individual who is
(53:37):
seen to be able to benefit,they'll only pay you out of the
profit that they make anyway, orthe tax that they would have
saved, if I got that right.
So they're always going to bethe winner and you've designed
it intentionally to be likethat.
Chris (53:46):
Basically, yes.
So it's uh we we we generallydon't charge any upfront fees,
James.
If we're looking if we'relooking at an initial review of
someone's situation, then wejust don't do that as part of
the project, and then we're veryhonest and we'll just say
whether there's anything thatlooks um attractive enough to
(54:07):
claim.
And then you're right,everything is based on a
percentage after that.
Dr James (54:17):
Yeah, that's I remember you telling that to me
as well, and that that kind ofstruck me too, basically.
And I guess that's what itmight be nice to do is skirted
over this earlier, but do youhave any case studies of Dennis
that you helped specifically allanonymized, of course, which is
(54:37):
20 years ago.
Orbit uh uh in his next taxreturn, something along those
lines.
Chris (54:49):
Of course I do.
The the the one where the thethe one I talked through where
um the guy had spent 470 on apractice is a real client where
he ended up with a check for£119,000 back from the revenue.
So I can that that's a summaryof a of a longer case study.
(55:10):
I've got plenty of them, James.
I've done a lot of work fordentists over the years.
Dr James (55:16):
Nice.
And then there was alsosomething I remember you saying
this on me, I think youmentioned it earlier, but I
think it's worth reiterating.
Uh, there's no, I don't know ifthis is the right terminology,
there's no statute oflimitations, if you will, as to
when you can claim these things.
If you have a practice that'sbuilt in the 60s and they've
been unclaimed, and the practicehas changed hands like three
(55:37):
times, but they've neveractually had their capital
allowances claimed property,then those pass on to the
current owner and they can claimthose retrospectively, uh,
despite it being a very longperiod of time elapsed since the
building was uh built.
Is that fair to say?
Chris (55:54):
Uh it's fair to say that sometimes they can and sometimes
they can't.
It's also fair to say that no,no, no, it's not it's not your
bad, it's just that um thereneeds to be some due diligence
carried out when you're whenyou're buying properties.
And again, the due diligencewhich we do to establish whether
(56:17):
there's a claim available issomething which um we do as the
initial assessment on theviability of a claim.
You keep cutting out on me,James.
Dr James (56:36):
Yes, still there.
Chris (56:38):
Sorry, I thought you you keep cutting out on me.
Um Alex Saunders has also.
Dr James (56:51):
Sincere apologies.
Let me just go ahead and um uhjump right over to that.
But yeah, just to round offwhat you were saying, Chris, on
the um just to round off on whatyou were saying, Chris.
Um am I right in saying that inprinciple it can be claimed a
very long, even if a practicewas built a very long time ago
historically, there's nothingthat rules that out.
(57:12):
Uh, but obviously it's on it inprinciple, but obviously it's
on a case-by-case basis.
Is that fair to say?
It is.
Chris (57:18):
In in for sure, if you've done um if you've carried out
refurbishment work or buildingwork or extension time work on a
property, there's no time limitat all.
Well, you know, go I mean youcan go back to 1776, James.
Although, to be fair, there'snot a lot going to be a lot left
(57:40):
from building work done 250years ago.
Um, you know, but no, you youcan go, you you can look back
into the past.
The only question, which againwe're very honest about, is if
we do an an initial assessment,which is free of charge, do the
initial assessment.
If it looks like it's not worthmaking the claim because the
(58:03):
annual amount of tax relief isgoing to be small, uh, we're
happy to do the initial reviewand be honest, and then allow
someone to make a choicethemselves as to whether it's
worth claiming.
Dr James (58:17):
Yeah, seriously to me.
Okay, Chris, is my connectionback a little bit?
Can you hear me?
Yeah, I can now.
Yeah, all right.
So it was just jumping in andout there a little bit, but I
think we're good now.
Okay, Alex is very patientlywaited uh with his question here
in the chat.
So let me just go ahead andread this out and then we'll
probably call time andproceedings this evening, Chris.
Uh, because we are coming up tohalf eight, and we do like to
(58:39):
keep these webinars powerful uhand succinct.
So Alex has said, so just toconfirm, your company works
alongside our currentaccountants.
Chris (58:51):
Yes.
Normally, yes.
Yes, um if if I can be honestand say it depends how good your
accountant is.
Some sometimes we doeverything, but more often than
not, we have a conversation, asensible conversation with an
accountant, and we workalongside them.
We don't offer we we don't doaccounts and we don't do audits
(59:19):
and we don't do all of thosestandard things that an
accounting firm would do.
We're as you said, James, we'rea niche practice and we focus
on one highly specialist thing,uh, which generally a firm of
accountants and won't have thepeople internally to do
themselves.
Dr James (59:37):
Lovely, Jovely.
Well, thank you for clearingthat one up, Chris Alex.
Hopefully that's the that'scleared up your your question
right there.
Uh, Chris, seems like a goodtime now to call time on
proceedings, just as I wassaying a second ago.
Guys, to the audience who arewith us, thank you so much for
coming along this evening.
Should you wish to connect withChris, there's a link there in
the chat.
We'll also send another linkafter this webinar via email as
(01:00:01):
well.
Chris is happy to give yourdental practice the once over,
see if there's an opportunitythere to be able to make some
sort of uh saving on tax orindeed tax rebate, of course.
Chris, I think it's only politethat I uh lead the clap, the
clap up.
Uh I'm clapping right now, youcan't see me because my hands
are just below the camera.
Uh the clap up on behalf of theDennis Investor Audience this
(01:00:22):
evening for sharing your time,wisdom, and knowledge.
So I just want to just say ahuge thank you on that one for
giving up your Wednesday to comeand talk to us as ever.
Guys, to everybody who's onthis webinar, thank you once
again for attending.
Congrats on attending on thesewebinars every two, three weeks,
something along those lines inthe Dennis Investor audience.
So I should be able to make anannouncement about the next one
very soon.
In the meantime, hope everybodyhas a lovely Wednesday evening
(01:00:45):
and we'll talk soon.
Cheers, bye bye.
Bye bye.
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