Plant expenditure in construction works

SSE built a hydroelectric scheme in Scotland at a cost of £300m including rectification works. The company claimed capital allowances amounting to £260m on items of plant under CAA 2001 s 11. HMRC accepted only £34m and refused the rest on the basis they were disqualified under s 21 and s 22. The taxpayer appealed.

The First-tier Tribunal said it first had to identify whether an item was ‘plant’. The judge said the main area of dispute between the parties was ‘the point at which “plant” with which the business is carried on becomes “setting” or “premises” in which it is carried on’. He agreed with the parties that the scheme should not be considered as a whole. Instead a piecemeal approach looking at each item should be adopted.

In a detailed decision the judge ruled that the many of the items were not excluded...