In Urenco Chemplants Ltd and Urenco UK Limited v HMRC [2019] TC7318 expenditure on the cost of constructing a tails management facility at a nuclear site was found to be structural and did not qualify for plant and machinery capital allowances.

  • HMRC enquired into the company and decided that some £192 million in capital expenditure did not qualify for the Plant and Machinery capital allowances claimed.
  • The company appealed against this decision.

The FTT chose to review assets as a single entity as they were physically connected and supported each other in each of the different structures.

The identity of the assets. (2) Whether the assets function as plant. (3) Whether any of the expenditure is on the provision of a building. (4) If so, whether any of the expenditure falls within Items 1, 4 and/or 22 List C

It then considered whether each separate facility functions as plant, whether such expenditures was on provision of a building or structure and if so whether the items were on List C, which lists items that are parts of building but are deemed to be plant. It concluded that:

  • The kiln facility and the condenser facility function as plant. Some of the separately identified assets also function as plant.
  • The other structures are the setting in which the trade is carried on rather than apparatus with which the trade is carried on and are not plant.
  • In any event, all the structures are buildings.

There was no expenditure on machinery, manufacturing or processing equipment or the alteration of land for the purpose only of installing plant or machinery.

UPDATE: Urenco subsequently appealed this decision to the Upper Tribunal, which found that the First Tier Tribunal (FTT) had erred in law. The case was remitted back to the FTT for reconsideration. The outcome of this is awaited. See Urenco Chemplants Limited and Urenco UK Limited v HMRC [2022] UKUT 00022

Useful guides on this topic

What expendure qualifies for plant and machinery allowances?
The difference between buildings, structures, what is a structure but is allowed.

Plant and machinery allowances
What allowances are available

What are qualifying activities for capital allowances?
What restrictions are there for different types of business?

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Urenco Chemplants Ltd and Urenco UK Limitedv HMRC [2019] TC7318