Work highlight / 9 Apr 2021

Supporting a hotel operator through a Land Remediation Relief claim for decontaminating a building

Insight shared by:

Gateley Capitus

A hotel operator undertaking a large-scale refurbishment uncovered vast amounts of asbestos. We were able to guide our client through a significant Land Remediation Relief claim.

Land Remediation Relief (LRR) is a generous enhanced tax deduction of 150% for money spent by companies to remediate contaminated land and buildings. This can include removing asbestos or dealing with harmful hydrocarbons or chemicals and even some naturally occurring substances such as Japanese Knotweed, radon and arsenic. Breaking-out buried structures or services in the ground at long-term derelict sites can also qualify.

Whilst the name of the relief might suggest that the problem must exist in the ground, it can just as much be located in the building, as in this example of a property where large amounts of asbestos removal were necessary as part of a renovation/ refurbishment.

How did we help?

The client: Hotel operator 

The works: Over a period of 4 years, the property underwent a full refurbishment to the guest amenities and in particular an upgrade to the bedrooms and en-suites.

The problem: Whilst carrying out works to install air conditioning to the bedrooms and new extract ventilation to the bathrooms, large amounts of asbestos were found within the services risers, ceilings and bathrooms. Then, further refurbishment of the bedrooms uncovered even more asbestos in the heating systems, particularly at radiator locations and to the pipework carrying water around the property.

Value of the LRR: In total we identified that £5.85m had been spent directly and indirectly to remove the asbestos. This resulted in the client claiming LRR of £8.776m which delivered a tax saving of £1.667m.

In conclusion: Taking the asbestos remediation, along with works to refurbish and renovate the property, we identified that 73% of the project expenditure could be written-off for tax in one way or another; either by qualifying for LRR, plant and machinery allowances, or revenue deductions. 

What you need to know

LRR is available for both residential and commercial property, and all types of projects including developments, regeneration projects, fit outs and refurbishments.

When claimed by an investor or occupier, LRR increases cashflow by 28.5p for every pound of qualifying spend, or for a trading-developer it is worth 9.5p in the pound. And a loss-making company can even give-up its tax losses in return for a cash payment from HM Revenue, called a ‘tax credit’, which is worth 24p in the pound.

Retrospective claims can be made but there is a time limit, so don’t delay in seeking advice.

Interested in finding out more?

We specialise in all types of LRR and are happy to undertake a no obligation review of any development or site to give an assessment of the relief available. Visit our Land Remediation Relief page or get in touch with our experts to see if we can boost your cashflow.