Manchester-based Tax Recovery Services is the first company of its kind in the UK and will help clients seek redress where accountants have failed to claim a valuable form of tax relief called Capital Allowances (CAs) when commercial properties are sold.

CAs allow the cost of physical assets — such as air conditioning, wiring, lighting and security systems — to be offset against the capital gain and corporation tax liability on commercial properties, but it must be claimed within two years.

If no claim is made before this deadline, CAs can no longer be recovered from HMRC, but accountants have a duty to act in the best interests of their client by advising them on all of the available tax reliefs that Parliament has introduced, which includes claiming CAs. TRS will bring cases against them, forcing them to take responsibility for failures through their professional indemnity insurance.

There are around 8,000 commercial property transactions each month, and TRS’s research has revealed that around 1,000 of these (12.5%) are completed without a CA claim ever having been made. The lost tax benefit in these situations is worth £52,000 on average across the whole market.

However, TRS won’t be acting for all sellers of commercial property who have lost out, only those where the property was sold for over £1million, and where the potential losses are likely to be much higher. Roughly 10% of commercial properties sold are valued at £1million or more, and TRS will be able to bring claims forward in cases where CAs have been missed once the two-year deadline has lapsed.

The duty of accountants to make these claims is not in doubt and became even more explicit when tax legislation was strengthened in 2014. This is when a “mandatory pooling requirement” set out how accountants were required to either make a CA claim upon the sale of a commercial property, or state what value of allowances was being passed onto the buyer. This was set out in the Finance Act 2012.

The professional conduct rules of the Institute of Chartered Accountants of England and Wales (ICAEW) emphasise the duty of accountants to address the benefits of the tax reliefs provided by CA and their responsibility to their clients for the accuracy of their CT600 company tax return.

TRS, armed with a team of specialist tax advisers, solicitors and eight tax barristers, will bring cases forward for those who have missed out unfairly on a no win no fee basis, supported by After The Event (ATE) Insurance from a leading legal insurer that specialises in professional negligence.

Martyn Caplan, CEO of Tax Recovery Services, said: “Negligence is costing commercial property owners hundreds of millions of pounds a year in lost Capital Allowance claims and, for the first time, we’re going to give them the opportunity to easily recover these losses.

“Where a property has been sold and no Capital Allowances claim has been made, that’s a massive alarm bell and former owners should immediately establish whether they are out of time to claim.

“The losses entailed when accountants do fail to act before the two-year deadline can run to more than £100,000 on properties worth more than £1m. It is properties above this threshold that we will be focusing on, and the process is remarkably straight forward when it comes to taking action against a negligent accountant.

“As for the legal position, there is no doubt that accountants have a professional duty to ask the right questions and ensure that all available Capital Allowances are claimed when appropriate. Having missed out on this tax relief, owners of commercial property have strong grounds to pursue negligent accountants who will carry professional indemnity insurance for exactly this reason.”