The long running dispute between the taxpayer (SSE Generation Limited) and HMRC in relation to what constitutes plant in the context of a hydroelectric power plant and civil engineering project has reached a conclusion in the Court of Appeal. 

The case had previously been heard through the First Tier Tribunal and then followed by the Upper Tier Tribunal who, apart from a small number of items, had largely found in favour of the taxpayer.  Unhappy with the conclusion reached by the UTT, HMRC had sought to appeal against the findings through The Court of Appeal.

In SSE Generation Ltd v HMRC [2021] EWCA Civ 105, the Court of Appeal dismissed HMRC’s appeal and agreed with the Upper Tier Tribunal’s conclusion as to the availability of plant and machinery allowances for a number of the disputed items. 

However, in an interesting twist, one item that had been overturned by the Upper tier Tribunal in favour of the taxpayer and considered as plant (namely the cut and cover conduits) was disallowed as being eligible for SSE Generation Limited to claim by the Court of Appeal.  Not because they deemed it not to qualify (they agreed it should have been allowed in full) but because of a procedural error.  Neither the taxpayer nor their advisors had sought or been granted the right to appeal the decision reached by the First Tier Tribunal when they concluded it was not plant.  As a consequence they were denied the opportunity to claim on the cut and cover conduits. 


Due to the relatively small expenditure incurred on the cut and cover conduits, SSE had decided not to appeal the decision made by the First Tier Tribunal that the conduits did not constitute plant.  As a consequence of this procedural error, they were therefore denied the opportunity of claiming plant and machinery allowances on the expenditure, despite being acknowledged as qualifying by the Court of Appeal.

A procedural error has resulted in the loss of allowances on items of expenditure that qualify for capital allowances and taxpayers advisors should always be mindful of opportunities to maximise the claims.

Lovell Consulting can help.

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