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the capital expenditure is incurred. The lessee’s allowance excludes the lessor’s allowance, but a lessor who contributes to the expenditure is not excluded.122 Naturally, (i) and (ii) above turn on land law principles. Tax courts have had to consider whether automatic public conveniences (APCs) and bus shelters were part of the land (they were) and whether a right to enter to clean, maintain and repair was enough for (ii) (it was not).123 FA 2000 widened the definition for qualifying expenditure by an equipment lessor to cover leased assets under the Affordable Warmth Programme.124 The same Act amends the definition of fixture so as to include boilers and radiators even though these are (relatively) easy to remove; as this was always thought to be the law, the change has retroactive effect.125 |
Special provisions govern disputes over whether the item is a fixture,126 expenditure (and disposals) by equipment lessors127 and the transfer to a lessee of the right to an allowance.128 Rules also apply where an interest in the land is sold and the price is referable to the fixture,129 and when the fixture ceases to belong to a particular person.130 These rules are to be taken at face value; the allowances are not confined to cases where the user is liable to tax.131 As a result of 1997 changes, the rules limit the amount qualifying for allowances to the original cost of the fixtures and prevent multiple claims.132 Rules also prevent the acceleration of allowances.133 The 1997 legislation allowed the vendor and purchaser of property to allocate part of the purchase price to fixtures.134 |
There are also rules imposing obligations on taxpayers to amend their returns to report relevant changes of circumstances in relation to these rules.135 |
24A.2.3 What is Plant and Machinery? |
24A.2.3.1 General |
Neither Machinery nor Plant is defined in CAA 2001 and the question whether an item is plant or machinery depends on the facts of the case. Where an item qualifies both for plant and machinery allowance and industrial building allowance,136 it is likely that the former, usually more generous, relief will be claimed.137 Parliament has attempted to provide some clarification on the boundary between plant and its setting but with what success remains to be seen (see below at §24A.2.4). |