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Case Law – Mersey Docks & Harbour Company v HMRC

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

14 Jan 2025

Written by: Clive Curd

Case Law – Changi Airport Loses $273m Tax Break

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

20 Dec 2024

Written by: Tom Lo

Furnished Holiday Lets – HMRC Clarify Legislation

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

07 Nov 2024

Written by: David Gibson

Archive

 

Latest News

Case Law – Mersey Docks & Harbour Company v HMRC

14 Jan 2025

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

Case Law – Changi Airport Loses $273m Tax Break

20 Dec 2024

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

Furnished Holiday Lets – HMRC Clarify Legislation

07 Nov 2024

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

New Case Law – Capital v Revenue

04 Oct 2024

A recent important Supreme Court decision in Centrica Overseas Holdings Limited v HMRC addresses the deductibility of expenses incurred by a company. The bar to deduct costs has been raised considerably

HMRC To Increase Scrutiny on Capital Allowances Claims

04 Oct 2024

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances. Getting the correct advice is essential

100% Full Expensing – What is it and why it’s important

09 Sep 2024

Hailed as the “Greatest Tax Break in History” when it was introduced in 2021, the 130% Super Deduction aimed to take some of the sting away from the hike in Corporation Tax rate that was announced in the same speech. Its replacement, Full Expensing (FE), took over in April 2023 as a slightly less headline-grabby 100% First Year Allowance. But what is it?

Some Good News for Furnished Holiday Let Owners

05 Aug 2024

Positive transitional rules have now been published allowing Furnished Holiday Let owners the ability to use Capital Allowances beyond April 2025

Case Ruling – HMRC v Altrad Services Limited

10 Jul 2024

The decision by the Court of Appeal will have far reaching implications in that it clearly resets the boundaries of what is a capital allowances avoidance scheme designed to increase the quantum of capital allowances claimed

Spring Budget Update

06 Mar 2024

Chancellor Jeremey Hunt announces changes to the capital allowances legislation affecting furnished holiday let owners

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

The legislation in Singapore closely follows that of UK Capital Allowances Act 2001; the case highlights the difficulty in defining what ‘plant’ is with there being no statutory definition of plant.

The appellant was Changi Airport Group (Singapore) Pte Ltd, a Singapore-incorporated company with its principal activities being the operation of Singapore’s main airport. The asset in dispute was the ‘RTA’, which comprises two runways, various taxiways and aprons. Changi Airport Group claimed allowances for machinery or plant on the capital expenditure incurred on the RTA. However, while the Comptroller of Income Tax (the Singaporean authorities’ version of HMRC) agreed that the RTA has specifically designed features intended to facilitate safe landing, taxiing, and take-off of aircraft, they only granted ‘slower’ industrial building allowances on the basis that the RTA are not ‘plant’ but ‘structure’. Changi Airport Group disagreed with this determination and appealed the decision.

Changi Airport appealed the case on multiple grounds, arguing that the RTA played a role in their business and that the aerodrome apparatus installed on the RTA is indivisible from the RTA. They also argued that the Board erred in applying both local and foreign cases, including Schofield and Barclay Curle.

The Court accepted that the RTA facilitates the safe landing, ground movement and take-off of aircraft. However, they sided with the Comptroller in finding that these functions are performed by the aerodrome equipment, such as the airfield lighting system, instrument landing system, signs and aircraft docking guidance system, for which Capital Allowances had been granted, and that although the aerodrome equipment is not designed to work without the RTA, the RTA continues to function even in the absence of the aerodrome equipment. That the RTA is a purpose-built structure that must be durable enough for aircraft to land, traverse, and rest also does not render it ‘plant’.

In line with UK legislation, the Singapore Income Tax Act does not provide a definition of ‘machinery or plant’ as such.  Instead, the Inland Revenue Authority of Singapore frequently adopts UK case law on the meaning of ‘plant’ in its technical guidance. As suggested in the Changi Airport case, these cases provide nuance and principles which may assist the court in assessing whether an asset has the qualities of ‘plant’.

Although it might not be common, capital allowances cases in the UK have a long history of adapting overseas cases in the judgments, such as Wangaratta, an Australian case about a dyehouse, and Waitaki, a New Zealand case about a cold store. It will be interesting to see if the Changi case is relied upon in any future UK case and in which direction. While whether this case has any impact by analogy in the UK courts remains to be seen, taxpayers will find it informative when making decisions on where the plant-structure divide sits for their particular situation.