Land Remediation Relief cont.

Please find more detail on Land Remediation Relief (LRR) and your company’s eligibility below.

Call 0161 723 2000 or email jk@sltd.co.uk to take advantage of this legislation.

Legislation

LRR was introduced in 2001 to address issues of market failure relating to the bringing back into use of land that had been blighted by previous use for industrial purposes
In 2009, relief extended to bring back into productive use land whose development is blighted by various kinds of dereliction (i.e. not just industrial use)
With effect from 1 April 2009, HMRC now accepts that Japanese Knotweed is sufficiently invasive and destructive that it satisfies the "harm" test and that land infested with Japanese Knotweed is contaminated for the purposes of LRR
The scope of LRR has therefore been extended to provide relief for expenditure incurred on clearing Japanese Knotweed, excluding clearance by removal to landfill sites
Relief is not available to individuals or partnerships. Therefore, it is broadly only available to companies
LRR is a relief from Corporation Tax. It provides a deduction of 100% plus an additional deduction of 50% for qualifying expenditure incurred by companies in cleaning up land in a contaminated state. However, as has been recognised, an infestation of Japanese Knotweed can occur during a period of ownership through no fault of the landowner (i.e. by fly-tipping) and to reflect this position the requirement that the land has to be acquired in a contaminated state does not apply to Japanese Knotweed. However, the "polluter pays" principles still apply and by purposely contaminating the land with Japanese Knotweed, LRR would not be available
LRR is available for both revenue and capital expenditure. However, the company must elect, within two years of the end of the accounting period in which the expenditure is incurred to treat qualifying capital expenditure as a deduction in computing their taxable profits – this must be done in writing to HMRC

How it impacts on your project

Qualifying expenditure includes the cost of establishing the level of contamination, removing the contamination or containing it so that the possibility of relevant harm is removed. There is no relief however if the work is not carried out
From 1 April 2009, methods of dealing with Japanese Knotweed that involve the removal of material to a landfill site are excluded from the relief
Methods of dealing with Japanese Knotweed that are applied in situ or at an offsite treatment centre do qualify
LRR is not available:
- where the company, or a party connected to the company, was responsible in any way for causing the contamination
- where arrangements have been put in place which either create or enhance a claim
- for cleaning up nuclear sites
HMRC will allow relief in all cases where the company takes remedial action as soon as practically possible after discovering the infestation. Therefore a company which finds it has Japanese Knotweed on its property and takes no action thus allowing the infestation to spread so that the area infested is significantly larger by the time they take action may be debarred from relief under the "polluter pays" principle
HMRC accept that a company is taking remedial action if it takes appropriate specialist advice and acts in accordance with that advice

Please call 0161 723 2000 or email jk@sltd.co.uk to take advantage of this useful legislation.

Please note: We recommend that you seek professional advice on the details of LRR and your company’s eligibility. Japanese Knotweed Solutions Limited cannot be held responsible for the incorrect interpretation of any advice provided regarding LRR.