Definition of plant and machinery

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Definition of plant and machinery
  • The development of case law
  • Consolidation of case law
  • Plant and machinery ― other qualifying expenditure
  • Plant and machinery used for business entertainment
  • Buildings
  • Structures and land
  • Override

The development of case law

In practice, it is not always clear whether an item will qualify as plant or machinery such that plant and machinery allowances may be claimed. The capital allowances legislation does not specifically define plant and machinery as it merely states that most buildings, parts of buildings and structures are not plant or machinery. See CAA 2001, ss 21–33.

Identifying machinery is likely to be reasonably straightforward. However, the term ‘plant’ is less easily defined and there is a significant body of case law setting out what is and what is not ‘plant’ for capital allowances purposes.

Permanent employment

The first of these cases was Yarmouth v France in which ‘plant’ was defined as:

“whatever apparatus is used by a businessman for carrying on his business ― not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for permanent employment in the business.”

Yarmouth v France (1887) 19 QBD 647

The concept of ‘permanent employment’ was developed further in the case of Hinton v Madden & Ireland Ltd in which tools with an average life of three years were held to be plant. The expenses of replacement or alteration of tools used for trade purposes falling before 1 April 2016 were allowable as a trade deduction under CTA 2009, s 68. ‘Tools’ in this context means any implement, utensil or article. This relief was only applicable where the sole reason those items would otherwise be disallowed was due to their capital nature.

Hinton v Madden & Ireland Ltd 38 TC 391 (subscription sensitive)

However, FA 2016, s 72 repeals this section in relation to transactions incurred on or after 1 April 2016. Companies and their advisers will need to ensure

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