Insights

Capital investments, and particularly more complex investments, with greater upfront risk are likely to be most affected by the Orsted ruling with reduced qualifying costs for tax purposes. In this article we explore the tax implications of the ruling in detail.

The Supreme Court in Orsted v HMRC [UKSC 12] ruled that pre-construction environmental studies do not qualify for capital allowances. The Court established a narrow "close connection" test, holding that expenditure must be directly "on" the plant rather than merely "in connection with" it. Studies providing advice on how to choose or design plant are considered too remote and fall "well outside the limiting curve" of qualifying costs.

The Tribunal refused the application, concluding that while the underlying tax dispute involving £2 billion in Research and Development (R&D) allowances for Hinkley Point C is undeniably complex, the specific appeal against the information notice did not meet the necessary threshold requirements.

Court of Appeal decision summary on the pre-construction (operational studies) costs for a major offshore windfarm.

Tax Tribunal determines that expenditure on a new quay wall qualifies for plant and machinery allowances

This recent tax case concerns the capital allowances treatment of 26 timber log camping pods at an outdoor activity centre in Wales.

The Upper Tribunal (UT) has now considered last year's First-tier tax (FTT) tribunal decision on the capital allowances treatment of certain costs associated with offshore windfarms and whilst it agreed with FTT on a number of issues it took a different view on the eligibility of preliminary studies and surveys, narrowing the scope for this claim and potential claims for similar expenditure on other projects. Windfarm The UT decision concerned the following issues: - Whether

An article on the tax treatment of costs for specialist building parts in uranium treatment facility

An article on a tax case that deals with capital allowances on the windfarm costs at Gunfleet Sands

A salient reminder on the need for owners (in this case a farming partnership) to plan all stages for tax purposes

Taxpayer succeeds on a number of points at Upper Tribunal with its hotel BPRA claim

Warehouse treated as a 'cold store' and 'silo for temporary storage' enabling capital allowances win at Tribunal.

HM Revenue & Customs (HMRC) have confirmed that they will accept the decision in the First-teir Tribunal (FTT) case of DAARASP LLP and BETEX

This was a notable victory for the taxpayer as some £13m of tax allowances depended almost entirely on the true meaning of 'temporary'.

The recent case of Inmarsat Global Limited v The Commissioners for Her Majesty’s Revenue & Customs [2021] UKUT0059(TCC) is an appeal against a decision of the First-tier tribunal (FTT) that expenditure on the cost of launching six satellites between 1990 and 1996 was not eligible for capital allowances. It was not disputed that had the company constructed and operated the satellites the associated launch costs would qualify for plant and machinery allowances under the ‘provis

Can a hole in the ground be an item of plant or machinery? The hole here was in fact a sophisticated underground cavern which had been artificially created by dissolving rock salt and then forcing the water out to be replaced by gas, which was held for storage. The capital allowances rules for ‘plant and machinery’ generally distinguish between items which are used in a trade (qualifying) and the setting in which the trade is carried out (non-qualifying). But the distinction

The case of Revenue and Customs Commissioners v SSE Generation Ltd [2021] will be of interest to anyone involved in capital allowances because it discusses in some detail the application and principles behind the statutory ‘structure’ exclusions contained in the Capital Allowances Act (‘CAA’) 2001 s22 and its potential exemptions in CAA 2001 s23 – List C. More specifically, how narrowly some of the terms in s22 need to be construed and applied as well as what needs to be cons

When it comes to determining repairs for tax purposes, words matter but substance and context matter more

Case law and tribunal decisions are how statutory interpretation evolves. It can reinforce long term views and sometimes challenge the settled status quo. It plays an essential role in informing all capital allowances advice and a summary of the most topical capital allowances tribunal decisions are summarised below. Grain silo and building facility tax win 10 January 2019 In the recent case of (1) STEPHEN MAY (2) STEPHEN MAY AND G MAY T/A S.C. MAY and THE COMMISSIONERS FOR H

Availability of 100% enterprise zone allowances through the use of a “Golden Contract” for the creation of data centres