EUROPE

Ports could be hit by end of IBAs

19 years ago

The British governments surprise decision to phase out Industrial Business Allowances (IBAs) by 2011 could have a significant impact on ports and cargo handlers who have invested in warehousing and storage buildings, accountancy firm Moore Stephens has warned.

Port Strategy: UK terminal operators could be hit with unexpected tax bill

Until now, companies buying new cargo warehouses and other buildings used for storage in the through-transport sector have been able to claim tax relief at a rate of 4% per annum of the original cost of the building, over a 25-year period. It is expected that this capital allowance will be gradually reduced over the next three years, until it is abolished altogether in 2011.

“This is something ports definitely need to be aware of if they are making any investment decisions,” said Moore Stephens tax partner Sue Bill. “As for those companies that have just bought a building, this decision could affect them a lot. They would have bought the building thinking they would get tax relief at 4% over 25 years, but the rules are that this will be withdrawn however recently you bought the building – whether or not you made that investment decision based on this tax relief.”

The news that IBAs would be phased out came as part of a series of capital allowance changes announced by the government. “This was completely out of the blue and not expected by anybody,” said Ms Bill. “Accountancy firms are saying, quite rightly, that this is very unfair.

“If someone has made an investment decision based on IBAs or has a lot of buildings where they are claiming IBAs, this will certainly have a major impact.”