CA22005 - Plant and Machinery Allowances (PMA): buildings and structures: check legislation first

If you get a claim that a building or structure qualifies for PMAs you should first check to see if it is given allowances by statute - see CA22220 onwards. If it is not, then check to see whether CAA01/S21 or S22 excludes it from PMAs. The legislation in Sections 21 and 22 prevents most buildings CA22010 and structures CA22020 being plant. You must remember that the legislation does not say that an asset is plant. All it does is say that certain classes of asset are not plant. The legislation also lists, in CAA01/S22, List B, item 7(a)-(c) and S23, List C, certain assets that are not affected by the statutory exclusions. Those assets have to satisfy the normal tests for being plant in common law before PMAs are due.

In SSE Generation ltd. v HMRC [2018] UKFTT 416 (TC) the judge considered that the correct approach to the legislation is to consider firstly whether an asset functions as ‘plant’ in common law; and secondly (if it does function as plant), whether it is excluded by statute. HMRC disagrees with this and other aspects of the SSE decision and has appealed to the Upper Tier. Even if the FTT was right about the order of approach, this should make no difference to the outcome and for practical purposes it would still be advisable to consider the statutory provisions first in most cases as it is usually simpler to determine whether an asset is excluded by statute than to consider whether it functions as common law plant.