Challenge To IBAs Abolition

A key feature of the Budget proposals withdrawing IBAs (including HBAs) is the absence of any "grandfathering" provisions that would permit continued claim for allowances in relation to building expenditure that has already been incurred or that is contracted to be incurred in the future. The absence of grandfathering provisions means that the legislation will have retrospective effect so that a taxpayer who has incurred or is committed to incur expenditure on the construction or acquisition of a hotel is no longer able to benefit from the legitimate expectation that allowances would be available over a specified and long term period. Financial models and even financial covenants will have been adversely affected. Business plans that have been prepared on the basis of the expectation are now largely redundant.