Compensation Following Compulsory Purchase – Business loss and relying on the accounts
Businesses are entitled to be compensated for their losses, but they need to put forward robust and reliable evidence to support their calculation of the business loss suffered. Compensating bodies need to ensure any compensation paid out is fair and is properly supported by evidence. How well do you understand how accounts can be used to support the business loss?
| Start Date | Venue | Price | |
|---|---|---|---|
| 11 May 2017 | Grant Thornton UK LLP, Birmingham | ||
| 23 May 2017 | Grant Thornton UK LLP, London |
Note: All prices are to be paid in GBP and are subject to VAT at the prevailing rate
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With HS2, Crossrail, Crossrail 2, and other infrastructure schemes in the news, more and more businesses are finding they are likely to have their premises taken from them, or to be impacted in some other way by Compulsory Purchase Orders. Chartered surveyors, valuers, solicitors, and others advising either party, will need to have a good understanding of recent developments in the assessment of business losses, the reliance that can be placed on accounts, and the extent of the evidence that can be gleaned from them.
As well as explaining how accounts, and other evidence, can be used in assessing business loss, these seminars will use real case studies to explain the issues that are faced by businesses, and compensating bodies, in relying on accounts to assess compensation, and how these are dealt with in practice. They will also touch on some of the more common tax issues that arise for businesses that are affected by compulsory purchase, and the tax consequences of the deal with the acquiring authority. The CPO may drastically impact a business’s tax position. A business will need to consider the tax issues at an early stage, to reflect cash flow needs, tax planning, and making use of any, and all, available reliefs.
Grant Thornton have dealt with a vast number of CPO claims over many years, having appeared before the Tribunal, as experts, for amounts ranging from a few thousand to many millions of pounds. The speakers will draw on their experience and talk through real examples, highlighting the issues that arise in practice, and how they are best dealt with including:
- multi-location businesses - impact of closure of one part of the business on the remainder
- phased relocations, parallel running
- unreliable accounts - what to do when the accounting information is poor, or has not been made available
- a new and developing businesses – what use are historical accounts?
- duty to mitigate
- assessing shadow losses in the light of the “Ramac” decision
- dealing with uncertainty in the shadow of the CPO, and the period of blight
Speakers
- Alison Ewing, Director, Ewing Forensic Accounting Ltd
- Steven McGrady, Director, Grant Thornton UK LLP
- Fred Brown BSc Hons, Director, Forensic and Investigation Services, Grant Thornton UK LLP
Programme
The accounts
- An overview of compensation for compulsory purchase, the principle of fair compensation.
- How accounts are used in assessing business loss (temporary loss and the value lost on extinguishment).
- Different types of accounts, how accounts of different entities look.
- What reliance can be placed on accounts?
- Digging deeper – what other evidence is available? How it might support or contradict the picture given by the accounts.
- Looking beyond the bottom line – the extent of information that can be found in a set of accounts, if you know where to look.
- Judgemental areas in the accounts (or ‘creative accounting’) – how different accounting policies can change the picture shown by accounts.
- The main tax issues arising in compulsory purchase and compensation
Tax issues that commonly arise in compulsory purchase
- What kind of taxpayer is being affected by the CPO?
- Analysis of the compensation package. What are its component elements?
- Attribution of the compensation to income (loss of profits) and capital (for loss of land).
- Capital gains element and timing of disposal. Distinguishing between compensation for land and an asset deriving its value from the land.
- Capital gains reliefs: reliefs and allowances for individuals (including principle private residence relief), reliefs for businesses including small part disposals, part disposals to authorities under CPO, rollover relief, business asset rollover relief
- Inheritance tax reliefs.
- Other tax issues arising on (a) extinguishment or (b) relocation of a business.
- Importance of considering the tax issues well in advance and planning strategically.