Dr James, 1m 43s:

Welcome everybody to another webinar between myself and my good friend, Mr. Chris Lonergan, all about how you can be as tax-efficient as possible as a principal and it legally and the oldest things that we must do. And we should not only should we 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 stuff out there, and our companies just don't have to know that much about it, and that's actually the whole entire purpose of this webinar. I'm gonna talk about something specific called capital allowances as well, but all of that juicy stuff to be discussed in due course. As ever, you can claim your CPD for this episode within the official Dentists Who Invest Smart Money Members Club. Smart Money Members Club also includes multiple mini courses and webinar series on finance for dentists, including how to become as tax efficient as possible, as well as understanding investing. All of this content counts as verifiable CPD, and you can download your certificates there and then upon completion of each lesson. In addition to this, we also include a whopping 10% discount on your dental indemnity and a 5% discount on lab bills for dental principals, amongst other perks and discounts for members. Please use the link in the description to claim your verifiable CPD for this episode. Chris, how are you this evening?

Chris, 3m 4s:

I'm really good, thanks, James. It's nice to see you again.

Dr James, 3m 8s:

Good to see you. By the way, Chris, I think you'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 two seconds. There we go. Magic that's much better. And then we can just jump in.

Chris, 3m 23s:

I'm up in Glasgow today, James. Wonderful. And uh for once it's not raining, so it's a really good evening.

Dr James, 3m 31s:

Yeah, that's good news. Turn up for the books in Scotland, I suppose you could say. But yeah, no, good stuff, Chris. Chris, uh obviously everybody's coming along tonight, and they all, you know, the purpose of tonight's webinar is to learn, excuse me. Oh, I thought I was gonna sneeze then. Oh, geez, sorry, I thought I was gonna sneeze just then, but it didn't quite happen. The purpose of tonight's webinar is to talk about how we're gonna be as tax-friendly as possible as principals. So obviously, we want to jump straight in for the uh benefit of everybody who's on this webinar. We want to get straight to subject matter and get cracking, because a lot of the stuff is stuff that can allow you to say five figures, six figures, even seven figures sometimes whenever it comes to dental practices. But of course, there'll be two types of people in this webinar tonight, Chris, the people who know of you and the people who have yet to meet you. Maybe it might be nice to just do a little bit of an intro, just a little bit of a hello, and then we can jump straight into the webinar, the presentation itself.

Chris, 4m 18s:

Okay, I will do just that right now, James. So my name's Lonigan. I'm one of the directors of a very fast-growing tax consultancy with offices in London, Manchester, and Glasgow, which is where I'm sitting right now. And um, my mission in life is to help people pay less tax, legally pay less tax around um something which is either a massive capital cost or a massive source of wealth for a dental professional, which would be their commercial property from which they trade as a dentist. So that's that's about me.

Dr James, 4m 57s:

Wonderful. So yeah, I mean that is a good intro to yourself, Chris. And I suppose not seems opportunity to in time to go ahead and jump straight in with the presentation, shall we? Because everybody on here is eagerly uh anticipating how they might go about being more tax efficient uh as principals, which the majority of this audience here with us tonight, of course, are okay.

Chris, 5m 18s:

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. So once again, thank you very much for inviting me along, James. Uh really appreciate it. It's really good to work with you. If you've got any questions of your own as we're going along, just chuck them in. I think this is the third the third time we've done something along these lines. So far, it's always been very enjoyable. A lot of value for everybody. So if you've got any questions, just um, as I say, jump in as we go along. So I want to talk today about elements of tax efficiency. Um, if there are any questions, I guess we can field them at the end, and James has a way of tracking them anyway, but I'll take any questions at the end of this uh brief presentation. As we said already, uh it's organized 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 tax planning and tax efficiency for around 30 years now in different sorts of organizations and different guises. So I think have some thoughts to offer on the subject. Um, I like working with dentists, I like working with medical people, I like working with people who put their own money into um a business and try and grow it and flourish. Um, but mainly, and more than anything else, I like to help people pay as little tax as they can while staying within the legislation that's available for tax reliefs in the preamble. Um, we've been around the the bit that's new here is we've been around for about nine years. We're currently about 80 people. Um, I've got a team that works with dental practices and medical practices, and I'm working a lot at the moment with principals who invest in their buildings, whether it's a surgery or a clinic, whether as a leaseholder in a property or as a freeholder in a property, um, which may either sit in the um in their own personal ownership um or within the practice. Um, so I'm working a lot with people who are making massive investments in their uh premises for obvious reasons, which as principals on this call you'll be aware of. But I think it's just worth um restating some of those just to make sure we're on the same page. Um, so I actually want to start quite high level and just talk about some of the issues, very high level of um that you face when you're running a practice. Um, I'm not going to talk about strategic and market pressures because you guys already know those and what's going on out there in the market. Um, operational challenges, well, stuff costs are going up all the time, the cost of everything is going up on a monthly basis, more regulation, more compliance. I really want to focus what I'm talking about on um financing and cash flow, tax and investment efficiency, and how in particular I can help people with that, and in particular, how um the massive investments that you tend to make in your commercial premises can massively influence and improve both your cash flow, your financing, and your tax bills and your return on investment for making capital investments in your business. Um so if I just focus on financing and cash flow for a little while, uh again, just to restate, everybody on the call knows that we have raising operational costs, uh, profit margins are being squeezed, uh, cash flow management is becoming increasingly important. Tax is going only one way, and will probably continue to go only one way under any new administration, and that's really eating into our profits, which we either use to distribute back into the company for growth, or to take ourselves to increase our own personal wealth. Um, access to finance at good rates is a little bit variable. So, again, I've got things which I can do that help improve um a company's uh credit creditworthiness um and cash flow, which helps with financing situations. And clearly um there are also aspects of expanding and uh either through organic methods or through acquisition of other practices where you need cash. And what I'm about to talk about today really helps you with financing and cash flow. Um, also want to talk a bit about uh tax and investment efficiency. Now, again, this is a really big topic, and we could spend a whole day or a whole week or a whole month talking about it. I really want to home in on things to do with capital commitments and property investments and property tax reliefs. And I'll explain why in a second. Um, that's not to say that other aspects of uh tax planning, such as your structure, how you extract money from the business, how you do pension planning, how you look at succession, which you could probably roll all into. How do you grow and protect and extract the wealth from your business that you spend your hard-earned money and your hard-earned time working on? But like I say, I really want to focus on the capital commitments that you make and investments in property and property tax reliefs that really help in these areas for some very good reasons. Um, if I take capital commitments, uh as far as I'm aware, every practice and every principle will have a premises. I mean, some people work as locums, some people travel around, um, but everybody needs a premises. And to keep up with modern day legislation and with what clients want, clearly there needs to be a significant investment on a regular basis in your premises. Um, in terms of significant, I frequently see my clients who spend between half a million pounds and 750,000 on a major fit out or an extension or refurbishment of their premises. Again, just to keep current and keep their customers happy. And this is true whether you're leasing a building or owning your own building, that there is going to be a significant capital cost every now and then. And you really owe it to yourselves to maximize the tax relief available from investments in capital type building work, which James has mentioned earlier, are often missed or misunderstood by a general-purpose um accountant. So my job is to help you extract every single pound of tax relief available from capital investments in buildings, uh which will therefore have a meaningful impact on your cash flow, borrowing, ROI, and your ability to invest and grow. So whether you're a leaseholder or a freeholder, you've made a big capital commitment and a big um capital expenditure in your premises and deserve to manage that as tax-sufficiently as possible and get whatever tax reliefs are coming your way to improve your financial situation. Um if we look for a second at um a principal of a firm who uh owns their own property and therefore is protecting their own wealth, these are some stats that I've pulled together from working with dentists over the years. Um now there may be some variances here, um, and these are um averages and examples rather than about individual people, but what I see is that typically between um 13 and 33 percent of the net wealth of somebody who owns their own premises from which they trade as a dental practice is tied up in their surgery. So um the question would be the devil's advocate question would be um is it worth spending time and effort in um making sure that you're protecting your wealth in a highly um valuable part of your wealth portfolio and taking advantage of any tax reliefs available in an area which represents a sizable chunk of your total wealth. That's perhaps a stupid question, um, because I have tens, if not hundreds, of clients who are talking to me on a regular basis about this particular thing and how, as James mentioned earlier, capital allowances can help people um either manage their capital expenditure as tax-sufficiently as possible and ultimately to protect their own personal wealth or the per or the wealth of their practice or their company or however they're structured to run their dental practice. So to place this in context a bit further, um, if I was to ask the group here, although I'm not sure people can answer, um, have you in the last five years done any of the following seven things? Have you added a surgery, refurbished reception or undertaken accessibility works? Have you converted rooms? Have you extended your practice? Um, have you done if you've done any of these things, then these will be trigger points for significant amounts of capital expenditure and also significant amount of tax relief if you know where to find it. Um the last time I asked this question in an open forum of dental principles, um, at least 50% of the audience put up their hands and said they'd done one of these things, and therefore there was a big relevance to what I'm just about to go into a bit more detail. So it's really all about thinking about have you spent money on capital improvements, refurbishments, fit-outs, um, or building works on your premises, and have you actually managed to maximize the tax relief available, which is very, very substantial. And I'll go into that in a little bit more detail in a few minutes. Um James mentioned capital allowances earlier. The main mechanism for generating tax relief from capital investments in property is through things called capital allowances. Um I mean you can either talk about these really technically or quite simply. I prefer to talk about them in a more simple way, and that capital allowances are just there to reward investment in capital projects or capital expenditure, particularly around buildings. Capital allowances generate tax relief, which can either be used by a company in terms of corporation tax relief or by an individual or a partnership, whether it's a non-limited or limited liability partnership to reduce income tax um liabilities. Um, capital allowances are part of the Capital Allowances Act 2001. Um it's actually a very um benign type set of legislation, and HMRC is very keen for people to make capital allowances claims on the basis that the more they stimulate investment in commercial property, the higher the tax take is in this country. I think for every hundred pounds spent on commercial property in the UK, there's around 18 or 19 pounds of tax for the government, uh for the Treasury. So it's clearly good business for them. Um tax release available for anybody registered for UK tax, whether it's an income taxpayer or a corporation taxpayer. Um there are massive benefits to game here, but this is not some sort of tax evasion or Jimmy Carl, go and get yourself in trouble type tax planning scheme. It's just solid tax planning using legislation that is, if anything, encouraged by HMRC. Um as James has mentioned, um, a decent accountant can normally claim capital allowances to do with certain pieces of capital equipment, which would be desks and tables, uh, lamps, chairs, um, autoclaves, all these kinds of pieces of what I would call loose items. An accountant generally is not that great or trained, in fact, in maximizing the tax reef available from investments in buildings. Um, and I'll explain again in a second why that's the case. So our specialism is in claiming capital allowances, which reduce people's tax liability, to do with buying a property or construction expenditure, which is going to be building, bitting out, refurbishing, converting, or extending a commercial property or andor a surgery or practice. Um and the reason we are um around is because maximising the claims in building what in the building world requires specialist skills, which typically are those of a quantity surveyor and a builder and a tax person, and to some extent of a lawyer. And it's very difficult to find those skills in one person. I just happen to I work a lot with accountants where they have a much deeper knowledge of other aspects of tax planning in partnership, normally, to accompany their general tax skills with our specialist skills that you get from working in the construction world and therefore having experiences which are out with the normal set of experiences of a typical accountant. So it's a good symbiotic type relationship.

Dr James, 20m 22s:

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Chris, 22m 32s:

In other areas, these are all kind of things where you'd expect a decent accountant to already know how to maximize tax relief. And as I said just recently, um on a lot of the projects that I work on, there is a clear division of labor, if you like, between me and someone's firm of accountants. And we just agree that there are certain things where it makes sense for an accountant to maximize the uh tax relief claim. And there are certain areas where it makes sense for me to do it. I mean, I can do anything that an accountant does, but more often than not, um my clients have agreed some sort of annual tax planning or tax management uh fee with their accountant, and it doesn't make sense to pay for a specialist to do something which can be done within an existing um kind of budget with a firm of accountants. Um if I look at uh the tax release available in a little bit more detail, there are basically three. Um the first is called plant and machinery allowances, which in my case are Is to do with items that are integral to a building. So this would be electrical systems, plumbing systems, heating, ventilation, air conditioning systems, any fitted items, fitted laboratory, furniture, fitted kitchens, fitted bathrooms, CCTV, security systems, lifts, elevators, access kind of equipment. These are all what you would call integral items of a building where you need some specialist skills to winkle out the maximum value from the investment. There are also other areas of capital expenditure, as I mentioned, which are loose fittings and pieces of plant and machinery, where any decent accountant already has the skills to maximize the tax relief. So if you look at a building, you've got the structure of a building or the fabric of the building, the shell of a building, externals and the foundations, that investment qualifies for something called structures and buildings allowances. The actual embedded items, typically in the walls, floors, and ceilings, and any fixtures and fixed items in the buildings qualify for plant and machinery allowances. And if you're looking at some kind of brownfield construction or went into a building where, for example, there was asbestos and you were encapsulating or getting rid of the asbestos, there's tax relief available for what's called remediation. That is, um, getting run-down buildings in a state which are suitable for habitation. Um, if you add all of these allowances together, often the total expenditure on a building um can be covered by them. So if you spend, say, £50,000 or £500,000 on a building, typically there'll be tax relief available on all of it. It's just a question of how do you maximize it and how do you get the best um bang for your buck, if you like. If I look quickly at a typical project, um, which is a real project I did for a dental practice, um, they had an architect come in and did quite a swanky design, um, spent quite a lot of money with the architect. The architect's fees became eligible for tax relief. Um, they spent some money with a structural engineer, expenditure became eligible for tax relief. Um, they bought a relatively dilapidated old Edwardian uh building and then set about refurbishing it and turned it from pretty run-down um what had been residential property into a much nicer and much more modern dental practice and spent around 650,000, 700,000 pounds in the process. So, this is a a real project that I I worked on with a real client. This was their approximate budget for the refurbishment, and you can see it's quite a substantial um budget, and you'll recognise all of these things from um either practices that you've worked in or practices that you own, or times when you've made your own expenditure in some of the areas that I mentioned earlier on in my slides. Um, total expenditure here was I think around 550,600 in this 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 excluded VAT. Um, there was around £264,000 of plant and machinery allowances and around £206,000 of structure and billings allowance. There was a little bit we couldn't claim on because there were some items in the building which didn't qualify for tax relief. But as you can see, there's something like 98 or 99% of the capital cost here which qualified for tax relief. I mean, having tax relief is really great and really useful. It's more what the client did with it that is um astonishing to me, which uh looked at this was actually a client um who still held his um practice uh as a private individual and in fact still traded as a sole practitioner uh rather than in any other structure. So this chap was actually paying tax at 45% um and his benefit from plant and machinery allowances in this case was £118,000 of tax relief, uh, which he actually got back from HMRC in the form of a cheque because he'd carried out the work last year and had paid his corporation tax, so was eligible, sorry, paid his income tax, so was eligible for a tax rebate, um, which he got back all in one year. And out of an expenditure of around 470, they had around £120,000 of um cash back, which made a big dent in the $470 that he spent on this um project work. So I've included some other examples down here. The um value of the claim is the same in each case. I've just split it between corporation tax and income tax. Um and as you can see, whichever way you cut it, whichever way you look at it, on an investment of about 470, the immediate tax benefit is significant, between 50 and 119,000 pounds, depending on the type of tax you pay and your current financial situation. That's from plant and machinery allowances. Um, they can all be grabbed in one year typically. The benefit from the structural type work um is still significant, um, but that is available only on an annual basis. That is actually claimable at 3% a year, so uh the tax saving or the cash flow saving every year from this investment range between about £1,000 and £2.75,000. So, you know, as James was saying, these are chunky figures uh which I'm regularly working on 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 turnover of 1.2 million, typically you should be making a trading profit at around 30%. Um, if you were to invest in capital expenditure, then you would also take um a depreciation charge to your PL. Um to work out taxable profits, you need to add back non-qualifying business expenses of which depreciation is normally the biggest. So in this case, the taxable profit for this business was £410,000. It was a corporate, so the tax liability would have been £102,000 and a half. Um, capital allowances in this case was £100,000. So the capital allowances adjust the taxable profits and reduce the tax savings that way. So capital allowances are um a balance sheet item for those of you who are savvy around um sets of accounts and they adjust taxable profits. Um they have no link to uh capital gains tax if you sell a property or corporation tax if you sell a property. Um in fact, the more you can sort of get into capital allowances, the better you're going to be off when you come to sell a property if that's one of your plans for the future, um, because it will reduce your tax bill on selling the property. So this is just a simple mechanism for how it works, it adjusts taxable profit and then generally generates quite a significant um tax saving. So I've talked a bit about refurbishing properties, building properties. Um, there are different scenarios where you can claim um tax relief. Uh you can either buy a property, in which case that transaction can unlock buried tax relief in the property. Uh, some really interesting scenarios are if you buy a residential property, which then comes into commercial purposes. Um if you were to uh do a minor refurbishment on a residential property, which I I sometimes see, um around 20 to 25% of the purchase price would be available in capital allowances to reduce your tax liability. Um, if there's a major refurbishment, then that figure is normally modified by the amount of refurbishment um carried out on the property. Same is true if you buy a property from a non-taxpaying entity. So if you buy something from uh NHS, charity, pension fund, SIP, then um, because only taxpayers can claim capital allowances, uh it's a no-brainer that if you're not a taxpayer, you can't have claimed it. So those allowances automatically transfer to the new owner on purchasing the property. Um, same is true if you were to buy a property from a developer or a builder. Um, capital allowances only available on assets held as fixed assets, which could be either in leasehold or as um freehold assets in land of buildings. Um, developers and builders generally hold buildings as trading stock because it is their business to build and sell a property. Therefore, they are denied capital allowances, and people who buy the buildings from them qualify for the capital allowances. So if you're if ever to go and buy, if you're able to instruct a builder to go and build um a surgery for you, then all of that money that you spend with the builder on building the surgery would automatically float over to you on uh completion um following a capital ounces claim uh and could be used for you as tax relief um going forward. There are some more complex scenarios as well, which if anybody has either bought a building um relatively recently or is looking at a building purchase right now, I'd be very happy to talk to them, very keen to talk to them, in fact, just to make sure that the legal documents in place, particularly if you're buying a building at the moment, are correctly set up so that as the new owner you can inherit all of the capital allowances coming your way. Um people often ask me about construction work, construction claims. Um having told them that there are normally some time limits around or some time implications around buying properties, the good news is um there is no there are no time limits on reviewing and analyzing and claiming tax relief from what I call historic capital expenditure, historical construction work. So um if you spent money over the last couple of years on capital works and it needs a review to see if it's been maximized, um, there could be a very strong uh amount of tax relief available from that. Um if the work's been done two or more years ago, there is still normally a significant benefit. Um, the difference would be that older work gets um relieved a bit slower than um more modern work. Again, for those of you who are principals who do their finances, you may have heard of things called annual investment allowance for capital investments on um property equipment and the like. Uh building expenditure clearly qualifies for annual investments allowance if you've got the headroom. Um but annual investments allowance only applies to relatively recent expenditure. So expenditure done, say five years ago, is still valuable to claim, um, but would be available on what's called a writing down basis. Um, and obviously we would work out or we we we work out with our clients before we go to um either opposing or finalizing a claim what the financial benefit is going to be and whether it's worth doing. Um sometimes it's not, and um, it's just worth having an initial look to see what the business case is for making um a claim. Again, and there's something buried in here which differentiates me and my company from an accountant. Um, according to uh accountancy gap, which is their legislation on how they do sets of accounts, um, an accountant can only claim couple ounces in areas where there is a well-described and um easily broken down uh invoice or set of figures. Um quite often I come across situations where someone's instructed a builder and there's say a five or six month construction project, and at the end of each month the builder submits um an interim invoice or interim certificate, and it's very, very difficult to itemize the elements on that and make sure they go into the right capital allowances buckets to um attract the right that the best capital allowances um result. Now, an accountant cannot legitimately split out those kind of costs because it's against their rules as an accountancy firm. Uh being quantity surveyors, uh project managers, and construction guys, uh we are actually allowed to do things which accountants aren't allowed to do, providing we can demonstrate that we have the correct um construction knowledge in our business. So we do a lot of what are called apportionment type claims where we can go and survey a building and work out the value of particular assets or particular pieces of capital equipment in a building, which again um an accountant cannot do unless they've been trained to do the kind of work which the guys in my teams do. So there are going to be lots of situations where um we can do things which cannot be done by an accountant. That's not to say, well, I have a lot of my friends who are accountants, I have a lot of people I work with who are accountants. It's not to denigrate accounts at all. It's just to say we have different skills, and um more often than not we end up working in partnership with people to make sure that the client ultimately gets the best um results from working with us and with their existing accountant. So that that's it, James. Quick whistle stop through quiz, quick whistle stop through capital allowances. And um, if you or anybody else have got any questions, please let me know.

Dr James, 39m 55s:

Yes, well, first and foremost, Chris, thank you for sharing that. Because this is how can I say this? It's this is something that I really feel that nationally in the world of dentistry and perhaps other industries or spheres as well, that there is a huge flipping reservoir of unclaimed uh allowances in these dental practices because uh because, as you were saying earlier, to actually identify these things requires such a new set of skills. It's beyond the remit of what can typically be achieved uh via a traditional account. Don't get me wrong, a lot of them will have a stab at it, but how well can they do it? And to me, the thing that you said 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 a builder, Chris, or you were a foreman on a building site, or you had some sort of involvement on the building trade. What's what's site builders?Yeah, there you go. I used to build things.Yeah, well, there you go, right. And um obviously you've actually seen what goes on literally behind the drywalls and stuff like that, you know. So and is this is it is that fair to say that this helps you and what you do now?

Chris, 41m 11s:

Oh, massively. The thing that the thing that helps me the most, James, is um having been involved in doing quantity surveying. Um because if if you if if you put somebody, I mean, I'm sitting in a room now in Glasgow, um, and it's a room which is maybe 20 feet long and uh 12 to 13 feet wide. And um if you gave me 15 minutes, I could tell you how much it costs to build that room, how much the lighting cost would have been, how much the plumbing cost would have been, uh, how much the doors and windows would have cost to put that room together. Um and that's the basis of doing a couple allowances claim. But the the only way you can do that is if you've been involved in building. You can if if you go to uh a tax a tax accountant and say, can you work out the value of things in that room? They go, Well, not really, it's not what I do. So it's just a very, very different skill set.

Dr James, 42m 13s:

Sure. And that's not to diminish accountants, but it's a bit like saying 100%. It's a bit it's a bit like saying, to put it in dental terms, it's a bit like saying a dent, there's a de, you know, uh you could you could have a dentist who can do a filling, but they've never actually looked into someone's mouth, right? Like you gotta have that skill. And you could you could probably describe a filling, you could probably describe how it's done, but maybe you just haven't actually seen it firsthand. Uh, and it always gives you an extra level of insight when you've done something like that. So I just it just I was bringing that up because I found it interesting, and I was like, right, well, why is this not as successful as it should be to everybody out there? And then when you put it in those terms that always stuck out of my memory, but I don't think you I'm not sure we mentioned that, guys. One thing I should say. Um, basically, if anybody's got any questions, feel free to pop those in chat. Now it's a great opportunity to ask Chris even about your own dental practice or specific things that you've noticed or specific things that you'd like a little bit of insight on. So wonderful opportunity to be able to do that before we uh wrap this up, wrap up this evening. We should be good, we should go on for another 10 minutes or so. Uh, and just while everybody's thinking of their questions, I might just bring up a few things as well, Chris, for the benefit of the audience, so that we know that we can get the absolute most out of your expertise this evening. So, Chris, obviously, whenever you help dental practice, uh, whenever we help them with capital allowances and reducing their tax bill and tax rebates and everything along those lines, what would you say the three most common things? Well, it doesn't have to be three, you know, four, five, whatever, two, even two, or whatever you fancy, just uh there's just there's no criteria per se. Other than that, if you could tell us what are the most common things that dentists have not yet claimed that are absolutely massive needle shifters uh in terms of in terms of massive potential to be able to uh reduce the corporate tax bill or to historically claim back something that they haven't yet claimed in order to reduce their tax bill going forwards, what would those be?

Chris, 44m 7s:

Well, in if I take equipment to one side, James, things like dental equipment to one side, um I I see a lot of missed opportunity around electrical systems in a business, whether it's lighting, heating, power. Uh I see a lot of um missed opportunities, and also that would include CCTV and security and cabling and other kinds of electrical systems in the building. I see a lot of um missed opportunity there. I see a lot of opportunity missed around access equipment, whether it's lifts or hoists, um or equipment for less able type people. Um I see a lot of missed opportunity around bespoke fitted uh items like cabinetry, um toilets, kitchens, receptions, bathrooms. These are some of the big areas where I see a lot of missed opportunity. I I see an I don't think detail, but I I see um well I'll I'll be honest and say I I I picked up the capital allowances claim done by an accountant last week.Okay.And uh there are three buckets that you can put capital allowances into. There's what's called the Main pool where you get very, very fast tax relief, the special pool where you get slightly slower tax relief, and structures and buildings allowance. And this chap had completely misclassified uh a lot of the expenditure in this building. Um and he'd stuck a lot of things which um well he just put things in shouldn't shouldn't really talk too much about him. He just puts him things in the wrong bucket, and as a consequence, uh the tax return for his client the tax return for his client was all wrong. I mean he'd done he made the best, he kind of made the best efforts based on his knowledge, but the tax return was all wrong, uh was wrong, and we calculated between us that the client had underpaid their tax bill by about £25,000. Yeah. Um now you have to make a commercial I hope you don't mind me saying this, James, but you have to make a commercial decision at that point. Um uh and the commercial decision that the client made was that he would rather not think 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 point out things to people, you can't make people uh change their uh change their decisions. But these are the kind of things that I see a lot where there's a lot of misclassification, a lot of missed opportunity. Um and you know, uh uh a lot of the time um it doesn't really make a massive difference, but sometimes it does. And people still get inquiries um and investigations around their tax affairs, which would have been sorted out better if they had a specialist doing this work.

Dr James, 47m 50s:

And maybe it's worth mentioning, Chris, that in that one particular example they'd underpaid, but the majority of times that you look at people's tax situation, they've probably overpaid, right? Because they haven't classified things correctly when it comes to capital allowances. Is that fair to say?

Chris, 48m 6s:

Quite a lot of times they haven't they've overpaid their tax because it's not been possible without specialist skills to um extract the tax relief from the capital expenditure. So it's just been sitting there in limbo um as a cost. Whereas in fact it should have been there as a load of tax relief available to the um investor.

Dr James, 48m 35s:

Yes, of course. No, I understood because I've it's it's that seemed to be a recurring theme from the case studies, I guess, that you'd explained to me beforehand and that you and I have talked about over the weeks, months, and years and what have you. But no, that's cool. Interesting. And then I was just I was just curious to know as well, when do you feel is a good opportunity to talk about these tax reliefs? Because I actually was talking to 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 the capital allowances. And he was like, But you know what, let me just get the squad up and running for a few years and then I'll think about it. And I was like, What are you talking about? Like, like, surely, why would you pay the tax just to have it back again? Like, surely it doesn't not make sense to think about that from the get-go.

Chris, 49m 23s:

That doesn't make sense. If you are if you're if you're looking to buy a property, whether it's um a property you're going to repurpose or or or a kind of property that's good to go in terms of a surgery, uh, you you would want somebody to be involved in looking at the capital allowances position prior to completion prior to completing the purchase. Okay. Um if you were to uh if you were thinking of doing some uh building work of your own, uh uh my recommendation would be to speak to uh a capital allowances expert before you uh well after you've appointed the builder, but before you start doing any building work. Um what I'm doing to mean say, I'm just about to spend a budget of say 750,000 pounds on my practice. Um can you tell me what the capital allowances are going to be because that's going to impact um my cash flow and you know my financial metrics going forward. And I um it's great to know two or three years down the line that I've got some tax relief, but it's even better, it's even better to know up front as part of my planning, so I can um work out how best to finance a scheme. So if you're planning on doing something, it's a good idea to speak to somebody before you start it. Um if you've already started something, then uh the best time to speak to somebody, if it's construction type work, is shortly after the work's finished. Um I think given that uh a lot most building work will qualify for either annual investment allowance or full expensing from a tax perspective, um it it it doesn't make sense to wait three or four years to do a capital allowances claim because you lose the ability to claim all the allowances in one year. Um and then you can only claim them at about 10% a year over a number of years. So it's a bit of financial um bit of financial thinking here because obviously on the one hand, um there are fees involved in claiming capital allowances, um, which you need to uh be prepared to spend. And on the other hand, and and maybe some people would argue they should wait until they're profitable before they should um either incur the fees or uh make the claims. Um and sometimes that's the right thing to do, but I I would argue that if you can afford it, um you should make the claim as soon as possible, because then you're in control of your tax relief. If you wait a few years to make the claim, then you can only claim the tax relief at the rate which HMRC lets you, and that's lower than the rate which you can use if you have kind of done it right at the beginning.

Dr James, 52m 31s:

If that's the same thing. No, it does, it absolutely makes sense. And um, you know, actually, Chris, this is uh this is actually my fault. Uh what we should have done uh for anybody who's on this webinar, we're gonna do this now, just before we continue the rest of our conversation. For anybody who wants to connect with Chris, uh what we're gonna do very shortly, we're actually gonna pop a link in the chat that you can use to register your details if you want Chris to high level take a look at your dental practice and see whenever it comes to your capital allowances, as in just your two cents and just for Chris to cast his eye over it and see if there's something there. And then that way, at least you know for sure, you know what I mean. It's not in no way commits you to going down the path having to do it. Of course, the very first thing to figure out is can you actually help somebody and then you take it from there? At least you know the answer yes, you know for sure. So we are gonna pop a link in the chat for anybody who wants to do that, give them uh you know, give their dental practice. You'll also be able to connect with Chris after this webinar uh via email that we're gonna send out as well, which will contain the what you and the way that you so the individual who is seen to be able to benefit, they'll only pay you out of the profit that they make anyway, or the tax that they would have saved, if I got that right. So they're always going to be the winner and you've designed it intentionally to be like that.

Chris, 53m 46s:

Basically, yes. So it's uh we we we generally don't charge any upfront fees, James. If we're looking if we're looking at an initial review of someone's situation, then we just don't do that as part of the project, and then we're very honest and we'll just say whether there's anything that looks um attractive enough to claim. And then you're right, everything is based on a percentage after that.

Dr James, 54m 17s:

Yeah, that's I remember you telling that to me as well, and that that kind of struck me too, basically. And I guess that's what it might be nice to do is skirted over this earlier, but do you have any case studies of Dennis that you helped specifically all anonymized, of course, which is 20 years ago.Orbit uh uh in his next tax return, something along those lines.

Chris, 54m 49s:

Of course I do. The the the one where the the the one I talked through where um the guy had spent 470 on a practice 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 summary of a of a longer case study. I've got plenty of them, James. I've done a lot of work for dentists over the years.

Dr James, 55m 16s:

Nice. And then there was also something I remember you saying this on me, I think you mentioned it earlier, but I think it's worth reiterating. Uh, there's no, I don't know if this is the right terminology, there's no statute of limitations, if you will, as to when you can claim these things. If you have a practice that's built in the 60s and they've been unclaimed, and the practice has changed hands like three times, but they've never actually had their capital allowances claimed property, then those pass on to the current owner and they can claim those retrospectively, uh, despite it being a very long period of time elapsed since the building was uh built. Is that fair to say?

Chris, 55m 54s:

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 there needs to be some due diligence carried out when you're when you're buying properties. And again, the due diligence which we do to establish whether there's a claim available is something which um we do as the initial assessment on the viability of a claim. You keep cutting out on me, James.

Dr James, 56m 36s:

Yes, still there.

Chris, 56m 38s:

Sorry, I thought you you keep cutting out on me. Um Alex Saunders has also.

Dr James, 56m 51s:

Sincere apologies. Let me just go ahead and um uh jump right over to that. But yeah, just to round off what you were saying, Chris, on the um just to round off on what you were saying, Chris. Um am I right in saying that in principle it can be claimed a very long, even if a practice was built a very long time ago historically, there's nothing that rules that out. Uh, but obviously it's on it in principle, but obviously it's on a case-by-case basis. Is that fair to say? It is.

Chris, 57m 18s:

In in for sure, if you've done um if you've carried out refurbishment work or building work or extension time work on a property, there's no time limit at all. Well, you know, go I mean you can go back to 1776, James. Although, to be fair, there's not a lot going to be a lot left from building work done 250 years ago. Um, you know, but no, you you can go, you you can look back into the past. The only question, which again we'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 worth making the claim because the annual amount of tax relief is going to be small, uh, we're happy to do the initial review and be honest, and then allow someone to make a choice themselves as to whether it's worth claiming.

Dr James, 58m 17s:

Yeah, seriously to me. Okay, Chris, is my connection back a little bit? Can you hear me? Yeah, I can now. Yeah, all right. So it was just jumping in and out there a little bit, but I think we're good now. Okay, Alex is very patiently waited uh with his question here in the chat. So let me just go ahead and read this out and then we'll probably call time and proceedings this evening, Chris. Uh, because we are coming up to half eight, and we do like to keep these webinars powerful uh and succinct. So Alex has said, so just to confirm, your company works alongside our current accountants.

Chris, 58m 51s:

Yes. Normally, yes. Yes, um if if I can be honest and say it depends how good your accountant is. Some sometimes we do everything, but more often than not, we have a conversation, a sensible conversation with an accountant, and we work alongside them. We don't offer we we don't do accounts and we don't do audits and we don't do all of those standard things that an accounting firm would do. We're as you said, James, we're a niche practice and we focus on one highly specialist thing, uh, which generally a firm of accountants and won't have the people internally to do themselves.

Dr James, 59m 37s:

Lovely, Jovely. Well, thank you for clearing that one up, Chris Alex. Hopefully that's the that's cleared up your your question right there. Uh, Chris, seems like a good time now to call time on proceedings, just as I was saying a second ago. Guys, to the audience who are with us, thank you so much for coming along this evening. Should you wish to connect with Chris, there's a link there in the chat. We'll also send another link after this webinar via email as well. Chris is happy to give your dental practice the once over, see if there's an opportunity there to be able to make some sort of uh saving on tax or indeed tax rebate, of course. Chris, I think it's only polite that I uh lead the clap, the clap up. Uh I'm clapping right now, you can't see me because my hands are just below the camera. Uh the clap up on behalf of the Dennis Investor Audience this evening for sharing your time, wisdom, and knowledge. So I just want to just say a huge thank you on that one for giving up your Wednesday to come and talk to us as ever. Guys, to everybody who's on this webinar, thank you once again for attending. Congrats on attending on these webinars every two, three weeks, something along those lines in the Dennis Investor audience. So I should be able to make an announcement about the next one very soon. In the meantime, hope everybody has a lovely Wednesday evening and we'll talk soon. Cheers, bye bye. Bye bye.