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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

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade.

The First-Tier Tribunal (FTT) were asked to consider whether plant & machinery allowances (PMAs) were available in respect of expenditure on the construction of a quay wall at the Port of Liverpool as shown in the youtube video Liverpool2 Construction.  The appeal by the taxpayer was successful.

The quantum of claim was £57.1million submitted in year-end period 31 March 2015 to 2018 for the development of a new deep water container terminal for larger vessels.

HMRC argued that PMAs were excluded by virtue of structure assets and works under section 22 Capital Allowances Act 2001 (CAA 2001) under list B item 5 for ‘a dock, harbour, wharf, pier, marina or jetty or any other structure in or at which vessels may be kept…”.

The burden of proof rests with the taxpayer, Mersey Docks to demonstrate that HMRC is wrong to disallow the expenditure and argued that the expenditure falls under sections 23 CAA 2001 which provides that certain expenditure under list C is unaffected by section 22, namely:

  1. Item 1 – Machinery not within any other item in this list
  2. Item 22 – The alteration of land for the purpose only of installing plant or machinery
  3. Item 24 – The provision of any jetty or similar structure provided mainly to carry plant or machinery

In reaching a decision, the FTT considered the principles raised in two cases, the most recent being Gunfleet Sands Ltd v HMRC (ADD Link) and whether the quay wall should be regarded as having a distinct identity or whether it should be regarded as part of a larger container transition area (CTA). Secondly, IRC v Barclay Curle & Co (ADD Link) which looked at the construction of a dry dock and whether the quay wall was apparatus with which the trade was undertaken or the premises where the trade was carried on.

In summary, the FTT favoured the tax payer stating that the quay wall “expenditure is expenditure on installing machinery, namely the STS cranes’.

Veritas Advisory’s view on the decision is that this case further demonstrates the importance of understanding the context of the expenditure in relation to the qualifying trade of the claimant, as well as how the items of plant & machinery are installed which can often lead to significantly increased claims.

Note that Veritas Advisory are aware of more enquiries being raised by HMRC into capital allowance claims and it is therefore, vital that the taxpayer seeks specialist capital allowances advice to ensure submitted claims are fully auditable, with the entitlement basis completed and fully justified, when submitted.