Introduction
Following an acquisition of sites, a leading UK manufacturer became aware of inherited contamination issues. Being committed to providing sustainable solutions for their customers, with quality and innovation at the crux of their operations, they recognised the importance of removing the contamination.
The Challenge
Upon the notification of asbestos contamination, the company acknowledged the urgency of the situation and the potential implications should the contamination spread, posing significant risks to their business operations, the environment, and public health.
The manufacturer sought professional assistance to carry out a project of identifying and removing asbestos-contaminated materials from their sites, specifically in Hartlepool and Ellesmere Port. The works commenced in 2020, and have continued into 2024.
The costs of removing asbestos were significant and without having the expertise in the tax reliefs and incentives available, their ability to fully deduct the costs against their profits and obtain corporation tax relief was restricted.
Our Expert Says
A Valuable Tax Incentive
“LRR is a valuable but often overlooked tax incentive. It is always a pleasure to support a business in securing tax relief for the work they have done in cleaning up polluted landscapes. It’s a win for the client, for us, and for the environment!”
Lauren Chester
Head of Tax
The Solution
Northern Accountants approached the business through their asbestos consultant and had a meeting with them to understand the nature of the remediation works and their specific needs and circumstances.
Having helped other clients with similar issues around expenditure on removing contaminants, an immediate resolution sprung to mind – Land Remediation Relief (LRR).
LRR is only available to companies cleaning or developing brownfield sites that have been contaminated due to industrial purposes. The relief aims to alleviate the financial burden associated with cleaning up and bringing such sites back into productive use. Under LRR, eligible expenses incurred in the remediation process can be increased by up to 150%, resulting in a reduction of taxable profits. This tax relief can provide a significant financial advantage, lowering the overall costs of the project.
For example, a company paying corporation tax at 25% could get a ⅓ of the qualifying remediation costs back in tax relief.
The Best Outcome
Using their own in-house software, Northern Accountants expert team assessed the eligibility criteria for LRR and quantified the potential tax savings for manufacturer.
Together, Northern Accountants and their internal finance team collaborated to obtain extensive documentation to support the land remediation report, this included environmental assessment reports, remediation plans, financial analyses, and invoices.
Northern Accountant’s software allowed them to generate a comprehensive LRR report in a format approved by HMRC, ready to be sent to the client for submission. This technology was instrumental in ensuring the process was efficient and resulted in the best outcome for the business.
The Benefits
With the assistance of Northern Accountants, the business successfully claimed LRR for the remediation activities carried out on their contaminated sites. The successful claim had the following benefits:
Saving Money
Securing the tax deduction as a result of the LRR. Over the past 3 years, the business has been entitled to LRR tax relief worth £10,000s.
Improved Flexibility
The tax relief has helped them to improve their overall cash flow and to reinvest in further land remediation projects across their other sites.
Local Benefits
Remediating contaminated sites enhances the local environment and contributes to social development and sustainability.
Time Efficient
Northern Accountants’ tax knowledge saved valuable time with LRR being a complex relief that otherwise would have taken them a significant amount of time to fully understand and access its benefits.
The Client’s Thoughts
Exceptional Service
“We are so glad that Northern Accountants was recommended to us! The service they provided was exceptional and saved us tens of thousands of pounds in tax which overwise may have been missed. Their Head of Tax Lauren was a huge help and was always on hand to answer any questions we had.”
Leading UK Manufacturer
Spokesperson
Conclusion
Claiming LRR significantly reduced the financial burden associated with the remediation efforts, allowing the company to allocate resources more effectively toward environmental restoration.
Moreover, by addressing the environmental liabilities proactively, the manufacturer improved its regulatory compliance status and enhanced its reputation as a responsible corporate citizen committed to environmental sustainability.
Key Takeaways
Early Intervention
Proactive identification and remediation of environmental liabilities can mitigate risks and reduce long-term costs for businesses.
Expert Guidance
Collaborating with experienced environmental consultants and tax advisors can help businesses navigate complex regulatory requirements and maximize available tax incentives.
Strategic Planning
Leveraging tax relief schemes such as LRR requires careful planning and documentation to ensure eligibility and maximize benefits. The use of technology can help to speed up this process.
In conclusion, the successful land remediation relief claim not only benefited the business financially but also demonstrated its commitment to environmental stewardship and corporate social responsibility.
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