After a lengthy consultation period in 2011 the Government announced that LRTR would not be abolished. With this decision the Government sent a clear message that brown field regeneration is still a key part of any new planning policy. This was great news for both investors and traders as LRTR is available on commercial and residential developments for UK companies. At the current 24% standard rate of corporation tax, developers can recover 12% on their qualifying land remediation expenditure, whilst investors and occupiers may recover 36%. Furthermore, if the relief generates a loss the company may surrender the loss, a tax credit of 16% can be applied for. This equates to a cash return of 24% (16% x 150%).
LRTR was introduced in 2001 to help the regeneration of contaminated sites in a depressed market. That benefit is still relevant today in an increasingly difficult market. Developers and investors are continuing to acquire sites which require remediation but many are still not taking full advantage of the relief that is available. To claim on capital expenditure an election must be submitted within two years of the year end in which the expenditure is incurred. Revenue expenditure can retrospectively be reviewed up to four years.
As with many forms of tax relief, there are various conditions that have to be met and technicalities to overcome before the benefit can be realised. The legislation has also been updated since its introduction in 2001 which adds to the complexity of the relief. The relief applies to both capital and revenue expenditure and is very broad in its scope and will apply to a wide range of construction projects across the UK. A number of terms in the legislation lack precise definition and as the legislation is relatively new it is yet to be tested before the courts.
We have had a dedicated team processing Land Remediation claims since 2001 and have become the market leaders for this type of tax relief. We have prepared claims for four of the top five national house builders and have secured over £700 Million in tax relief after agreement with HMRC.
Our experience and negotiations with HMRC over the last few years have given us a unique understanding of how to approach claims for this relief. We are able maximise the available relief for the client whilst ensuring it is low risk for HMRC.
For further information please refer to attached PDF documents or contact our specialist Tom Rendle.