In Gunfleet Sands Limited & Ors v HMRC [2022] TC08387, the First Tier Tribunal (FTT) found that studies and project management costs relating to offshore windfarms partly qualified for capital allowances.

  • Gunfleet Sands Limited, Gunfleet Sands II Limited, Walney (UK) Offshore Windfarms Limited and Orsted West of Duddon Sands (UK) Limited (the companies) incurred expenditure of approximately £48m in relation to the construction of offshore wind farms.
  • HMRC accepted that Plant and machinery capital allowances were available on the fabrication and installation of the wind turbines and the electrical array cables which connected them.
    • These were known collectively as the 'generation assets'.
  • Capital allowances were denied by HMRC on studies and project management costs on the basis that the expenditure was too remote from, and was not on the provision of, the generation assets (which represented plant).
    • The studies included: environmental impact studies and assessments; metOcean studies, including studies on water level, wave regime, currents and wind conditions, geophysical and geotechnical studies.
    • HMRC’s position was that the studies and project management expenditure incurred put the companies in the position to incur expenditure on the provision of plant. The expenditure was not itself on the provision of plant.

The companies Appealed to the First Tier Tribunal (FTT), which found that:

  • The generation assets formed a single item of Plant for the purposes of capital allowances: the components were directed towards a single purpose.
  • A number of costs incurred on the studies were directly related to the necessary design/installation of the wind turbines or design/construction of the wind farm. These qualified for capital allowances being expenditure on the provision of the wind turbines, which were plant.
    • This expenditure included: fish and shellfish studies, marine mammal studies, archaeology, wrecks and cultural heritage studies, traffic, transport and tourism studies, reconnaissance and detailed geophysical and geotechnical studies.
  • Allowances were available in principle on an apportionment of project management costs.
    • Where project management costs comprised preliminaries (overheads which cannot be specifically attributed to a particular item of qualifying plant), capital allowances were available to the extent the management expenditure related to matters which qualified for allowances themselves.
  • Where expenditure on the studies and project management did not qualify for capital allowances, it could not be deducted from profits as pre-trading expenditure as it was capital in nature.


While many advisers and taxpayers may not need to consider capital allowances on offshore wind farms, this case does illustrate well the underlying principles that would apply in many commonly seen construction projects.

Useful guides on this topic

What expenditure qualifies for plant & machinery allowances?
What is plant and machinery? What expenditure qualifies as plant and machinery? What is treated as part of a building?

Annual Investment Allowance (AIA)
What is the Annual Investment Allowance? What are the limits? What expenditure qualifies? 

Plant & machinery: Allowances
What capital allowances are available on plant and machinery? How do you calculate them? What are qualifying activities?

Long-life assets
What is a long-life asset for capital allowances? 

Structures & Buildings Allowance (SBA)
Who can claim Structures and Buildings allowance? What expenditure is eligible? How to make a claim? 

Super-deduction & First Year Allowances
What is the new Super-deduction allowance? When does it apply and what is the rate of allowance? What other First Year Allowances (FYAs) are available? What is the SR Allowance? What if I dispose of an asset on which the Super-deduction or SR allowance has been claimed?

External link

Gunfleet Sands Limited & Ors v HMRC [2022] TC08387

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