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HMRC internal manual

Business Income Manual

Waste disposal: site preparation: capital expenditure: qualifying expenditure

S165-S167 Income Tax (Trading and Other Income) Act 2005, S142-S144 Corporation Tax Act 2009

Site preparation expenditure is defined in the legislation in relation to a waste disposal site as expenditure incurred on preparing the site for the deposit of waste materials.

The cost of acquiring the site is excluded, as is any expenditure that qualifies for capital allowances).

Capital expenditure that may be allowed under the legislation includes those costs associated with:

  • assessing a site for suitability including site surveys and soil testing,
  • the obtaining of planning permission and waste disposal licences,
  • the installation of site infrastructure, and
  • engineering of the site ready for waste disposal.

All of the expenditure contributes to creating the total potential capacity of the site. Such expenditure is normally incurred before waste disposal commences on a site but relief is available whether the expenditure is incurred before or after waste disposal commences.

It is also immaterial whether these costs are incurred before or after a waste disposal licence is granted.

Where site preparation expenditure is incurred in relation to a site for which planning permission, or a waste disposal licence, is never granted, that expenditure is abortive expenditure. The expenditure cannot be relieved under the legislation because a condition for relief is that the person incurring the expenditure must hold a waste disposal licence at the time that person first deposits waste materials on the site in question. If no waste is ever deposited this condition cannot be satisfied.

Similarly, where expenditure is incurred in creating the whole potential capacity of a site and, for whatever reason, the whole of that potential capacity is not ultimately used, some fraction of the qualifying expenditure will not be relieved. This might occur, for example, where a series of licences or permissions, etc is required as development of a large site progresses. If such licences, etc are refused for part of the site the fraction of the site preparation expenditure relating to that part of the site will not be relieved.