Asbestos: how does it affect your business?

The control of Asbestos Regulations 2006 came into force last November - consolidating much legislation under one banner. So how does this affect you as an owner or operator of a pub?

As the duty holder in non-domestic premises, it is your responsibility to assess whether asbestos is, or is liable to be, present within your property. If asbestos is found, an appropriate plan to manage any risks must be prepared and implemented.

In short, you have a duty of care to your employees and customers to ensure that they do not come into contact with hazardous substances, including asbestos.

Where it might be located​

Asbestos is present in many premises and, while it is often hidden from view, can be found in surface materials and seemingly innocuous substances.

Historically, asbestos has been widely used where there is a requirement for fire or heat resistant materials.

This has resulted in its use as insulation in heating and hot water systems, cooking extract systems, along with wall and ceiling coverings, to name but a few instances.

Artex may appear to be merely a textured coating on walls or ceilings but historically it contained asbestos. Your outside store may even be constructed entirely of asbestos-based products.

To ensure you are complying with all legal requirements, the first port of call must be to identify whether you have any asbestos within your building.

There are many specialist firms able to carry out a survey and the relevant tests to ascertain whether asbestos is present, they may then be able to advise you on the options that are open to you to ensure that you comply with the regulations.

A basic strategy​

The cost implications of complying with the regulations can vary depending on the works required to deal with the asbestos. Although the detailed options are numerous, three basic strategies are to:

• Erect signage on materials that contain asbestos. This ensures that the product is clearly identified as containing a harmful substance and users of the building are warned from disturbing it. This low-cost option may be applicable for back-of-house areas, but is unlikely to be appropriate for public areas.
• Encapsulate the asbestos. This more expensive strategy places a barrier between the harmful substances and potential receptors to minimise the risk of anyone coming into contact with the asbestos. It does, however, retain the contaminants on-site, which could be problematic in the future.
• Removal of asbestos is the most expensive option, but it ensures that the building no longer contains hazardous materials and cannot pose any further risk. This involves replacing materials that contained asbestos with a modern equivalent, often this involves extensive removal and reinstatement works to surrounding areas. As a result the costs can vary between a few thousand pounds to hundreds of thousands of pounds, depending on the extent of contamination.

Tax relief ​

Expenditure on works that remedy the effects of harmful substances, such as asbestos, attracts 150 per cent tax relief under legislation introduced in the Finance Act 2001, Land Remediation Relief (LRR).

This applies solely to UK companies subect to corporation tax, so assuming a tax rate of 30 per cent, this can subsidise the asbestos removal costs of up to 45p in every £1 of qualifying expenditure incurred.

A number of conditions mean that this tax relief is not available to everyone on all types of expenditure or property. It is impossible to list all the restrictions here however, two examples are:

• You are not eligible to claim LRR if you owned the premises at the time the asbestos was installed or if there is a relevant connection between yourself and the polluter. This is broadly in accordance with the 'polluter pays' principle of environmental legislation.
• If you own a hotel property and the expenditure would qualify for hotel allowances this also may preclude you from claiming LRR.

But, as with most forms of tax relief, achieving the maximum claim involves detailed research of the legislation and careful consideration of each item of expenditure to determine whether it is eligible.

David McCreadie is an associate at Davis Langdon Crosher & James, the tax and finance arm of financial experts Davis Langdon.​