The property industry has failed to repeat its Finance Bill coup over VAT with finance leases.
Last week Inland Revenue introduced minor changes to finance leases as they affect capital allowance, but it refused to narrow the target of the measure and limit clause 80 of the Bill to affect only sale-and-leaseback deals.
Under the changes, bank and institutions funding development will still be entitled to capital allowances when they buy buildings. But this would be clawed back if and when they receive benefits on repurchasing the investment some years down the line.
According to Clifford Chance tax consultant Stephen Reisbach the main concern in the industry is the effect this will have on deals involving escalating rents.
