How Tidy Accounting Systems Unlock Capital Allowances and How We Can Help
Capital allowances rely on granular data: dates, costs, descriptions, categories, asset registers to name a few. When accounting systems are disorganised, lacking clear cost breakdowns, asset classifications or a clean audit trail, the ability to make timely and accurate claims is compromised.
However, with some relatively straightforward adjustments and guidance, businesses can realign their accounting practices to support strong, defensible capital allowances claims and we can help.
Why tidy systems matter for Capital Allowances
At its core, a capital allowances claim involves identifying qualifying expenditure on plant and machinery (or structures and buildings), aligning it to the correct tax treatment and ensuring it is backed by documentation.
Poor data leads to:
- Missed claims on eligible assets
- Delay in filing or receiving relief
- Increased HMRC scrutiny
- Costly forensic analysis post-acquisition or years later
Well-maintained accounting systems by contrast offer:
- Clear segregation of capital vs. revenue spend
- Easy tracing of invoices and project costs
- Faster preparation and review
How we help clients tidy up – A Step-by-Step Scenario
Let’s walk through a practical example of how we help a client improve their systems to support capital allowances:
Scenario: A Property Investment Company acquiring commercial sites
A client has acquired several commercial properties over the past 5 years. Their capital expenditure is lumped together in their general ledger with vague descriptions like “Building Works” or “Fit-out Costs”. They’ve claimed minimal capital allowances historically.
Step 1: Initial Review
We begin light-touch by:
- Reviewing the client’s chart of accounts
- Identifying how capital expenditure is coded
- Assessing invoice descriptions and supporting documents
- Highlight gaps: missing asset registers, mixed costs, vague descriptions etc.
Step 2: Education & Buy-in
We explain:
- The tax impact of better categorisation (e.g. how splitting £1M into qualifying assets could generate £250k+ in relief)
- The importance of setting up codes for assets (lighting, HVAC, sanitaryware, etc.)
- How minor changes now reduce expensive professional fees later
Step 3: System Structuring
Working with their team, we:
- Create a recommended chart of accounts template for capital projects
- Introduce tagging or cost category fields
- Suggest processes for invoice capture and metadata tagging (e.g linking invoices to asset categories at entry)
Step 4: Retrospective Clean-up
For past projects, we assist with:
- Splitting bulk entries using underlying invoices
- Mapping costs to allowable categories using capital allowances legislation and case law
- Preparing documentation that HMRC would expect (e.g. asset schedules, apportionments)
Step 5: Proactive Claiming
Once the data is clean:
- We prepare and submit capital allowances claims efficiently
- Savings are realised more quickly
- The client can evidence claims with confidence
Step 6: Ongoing Support & Automation
We help with best practice:
- Recommend templates for future capital expenditure projects
- Set up reminders and checklists for future acquisitions
- Train staff on capturing the right data at source
Small Changes, Big Impact
Capital allowances work is highly technical but a lot of the value lies in the groundwork. By helping clients tidy up their accounting systems, we can spot tax savings and improve compliance.
At Botham Accounting, we work with clients to build future-proof financial systems that make the entire business more efficient. With the right advice, every property purchase, fit-out, or infrastructure project can become an opportunity to maximise value.
If your systems could use some support or if you’ve wondered whether you’re leaving allowances unclaimed, let’s have a conversation.
