The recent Upper Tribunal (UT) decision in the case of Urenco Chemplants Limited & Anor v HMRC lends support for making capital allowances claims on functional items in the business that might on first analysis appear to be a building/structural item. The distinction between “building” and “plant” is important because qualifying plant and machinery can attract capital allowances as much as 130% under the current super-deduction regime whilst the tax relief available for a qualifying building/structure through SBAs is only at a very slow rate of 3% per year.

The UT considered the meaning of “building” in the context of the plant and machinery restrictions in the capital allowances legislation and took the view that there was a “spectrum of everyday meanings” of the word “building”. The case considered two fundamental tests which have been established over many years of case law: the function test and the premises test, to establish whether or not an asset is plant. The UT concluded that these tests had been established too narrowly and that more weight should have been applied to the main function of the asset rather than just its appearance.

So what conclusions can we draw from this: an asset that looks like a building or appears structural (and is perhaps even described as a building or structure) but that functions primarily as something else may be eligible for plant and machinery allowances and will certainly merit a review.

At Menzies we ensure our capital allowances reviews are more than just a look back desk-top exercise. We like to work in real time, conduct site visits and inspect your capital assets to ensure we maximise your claims.