Expenditure on plant is allowable

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 First-tier Tribunal allowed the taxpayer’s appeal. After the Upper Tribunal dismissed its appeal HMRC took the case to the Court of Appeal.

Lady Justice Rose considered first the overlap between s 22(1)(a) (the provision of a structure or other asset in list B) and s 22(1)(b) (works involving the alteration of land). She agreed with the Upper Tribunal that if the disputed plant was a structure or an asset it was excluded either by s 22(1)(a) and list B or it was allowable. It was not necessary to consider whether it was caught...