Hoteliers may be missing out on millions of pounds in tax rebates, much of which can be claimed retrospectively.
The rebates are for industrial buildings allowances, which have been available since 1978, and for plant and machinery allowances.
The true extent of the benefits have only recently become apparent as tax cases have come before the courts.
Independent hotelier Allan Deeson, a former general manager of Edinburgh’s Caledonian Hotel, said he believed the allowances could benefit many operators.
Through a scheme marketed by Edinburgh-based hotel and tourism specialists RGA and accountancy firm Primrose McCabe & Co, he has saved up to £20,000 in the first year of claiming tax relief.
He bought the 14-bedroom Parklands Hotel in Perth for £250,000 in 1992, but a claim for tax relief was only submitted last year. “The beauty of the scheme is that it isn’t a one-off saving. Over the next few years I will qualify for tax relief on about 30% of the purchase price,” he said.
Barry Laurie, tax partner at Primrose McCabe, said that while many hoteliers were aware of tax relief for refurbishments, few claimed what they were entitled to when buying a property.
“Buildings have a lot of material which constitutes machinery for tax purposes, such as lifts, central heating and so on,” he explained.
“In addition, hotels qualify for industrial buildings tax allowances which cover most of the rest of the property costs except land.”
Another hotelier who has benefited is Maureen Duffin. In 1989 she bought the 31-bedroom Kyle Hotel at Kyle of Lochalsh. She only claimed tax relief on the purchase last year. “I received an injection of £42,000 and will save around £3,000 a year,” said Mrs Duffin. Some 10% of the savings made went on professional fees.
Primrose McCabe charges clients either a fixed-rate fee or on a sliding scale success-only basis.