Asbestos was extensively used in many building materials; therefore large quantities of asbestos still remain in buildings that were built prior to the restriction of asbestos use. These materials represent one of the most significant occupational health risks in the UK.
Control of Asbestos at Work Regulations 2002, Regulation 4 places a specific legal duty on employers to identify materials containing asbestos in any premises owned, occupied, managed or for which they have a responsibility to assess the risk of these materials.
From 21 May 2004 onwards, it is a legal requirement for employers to determine the presence of asbestos their premises. If the survey discovers asbestos materials that are damaged or are vulnerable to damage during normal occupation of the premises, the building may be considered to be contaminated because the asbestos poses a health risk to the workers. Any such contamination needs to be dealt with by expert contractors, which is likely to be expensive
Expenditure on remediating this type of contamination would generally be disallowed as capital expenditure. However, there is a special form of relief with conditions set out in the Corporation Tax Act 2009 which allows capital costs connected with cleaning up asbestos to be treated as revenue expenses, and permits 150% of qualifying revenue expenses to be deducted in the profit and loss account. If the company makes a loss after these extra cost deductions it can claim a tax credit.
Land remediation relief is only available to registered UK companies that occupy the land for its own trade. This seems a little unfair on individuals, partnerships and trustees who may also have interests in contaminated land or buildings. Potentially some of this expenditure may qualify as a repair, so some tax relief may be allowable.
The rule of claiming the relief is that the land must have been in a contaminated state when it was acquired by the claimant company. The claimant company must not have caused the contamination by anything it has done or omitted to do. So if the company originally used asbestos in construction of the building it will not qualify for land remediation.
Qualifying costs include preparatory work such as investigating and assessing land before some action is taken to prevent, minimise, remedy or mitigate the effects of the pollution causing the contamination. But, where no asbestos is found, or where asbestos is discovered, the assessment costs will not qualify for land remediation relief as no remediation work is actually undertaken.
The claim for land remediation relief must be submitted within two years of the end of the accounting period in which the costs were incurred.