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Any Answers answered: Are polytunnels plant? By Nichola Ross Martin

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30th Nov 2006
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Capital allowances on modern assets: Are polytunnels plant, or just modern greenhouse structures?

Most practitioners are aware that there is rather more to the subject of capital allowances than meets the eye. Where modern technology and materials change the nature of an asset, it is seldom the simple matter of just saying “Ah, an item of plant, therefore we can claim the appropriate allowance”.

The 2001 Capital Allowance act gives us some lists of assets which do and do not qualify as plant, and the rest of it is down to interpretation of case law. Luckily there have been a sizeable number of cases on the topic over the years, and as a result we know why certain things are deemed to be plant and others are not. The problem that occurs from time to time is that due to the development of modern materials and technologies new types of assets are created and we end up with new assets that are simply not on any list and have never been dealt with by the courts.

This is exactly the case with polytunnels. These things are literally “cropping up” all over the countryside. They do not seem to be exactly cheap either, and so nurseries and farms can spend a material amount of money building and maintaining them.

John wrote into Any Answers a few weeks ago to ask if anyone knew if you could claim capital allowances on a polytunnel. No one answered him the first time round, so he posted his question again. I featured it in Monday’s taxwire to see if we could find him the answer.

His question went like this: “It is well-known that most glasshouses are not "plant" for capital allowances purposes, the exception being those with sophisticated computerised equipment included; but what about polytunnels? In my client's case (a small bulb nursery), it came in kit form and is moveable. I think it would be difficult to treat it as a building so presumably ABA would not be available. I can find nothing in my tax library indexes mentioning polytunnels. Can anyone help please? “

I have to say that given the sheer number of polytunnels around these days, I felt sure that someone would know the answer, but it is clear that members, myself included, are not 100% sure of the correct treatment.

S 21 and s 22 of CAA 2001 say that plant does not include buildings and structures but s 23 gives us a list of certain items although structure like, are actually treated as plant. This includes “moveable buildings intended to be moved in the course of the qualifying activity”.

Cathy Blacklock suggested that “if the tunnels are movable, intended to be moved in the course of the trade and actually moved, then it is possible that capital allowances could be claimed (i.e. as for portacabins).” She continued “However, given the nature of the trade, I would think that they would be more likely to be treated in the same way as glasshouses.”

Glasshouses are we know structures, but the chink of light in a mass of opaque plastic is that polytunnels are moveable, and this is part of their appeal. The question the practitioner needs to ask the client though is “are they actually moved in the course of the trade?” HMRC will definitely be interested to know if John’s client actually moves his tunnels. The case law on the topic is not extremely helpful and whilst HMRC allow builders huts to be plant if they are moved and used on different sites, it is not quite so straightforward for other structures. The case for polytunnels might be stronger if they were called “porta-tunnels”, and this reminds me that you can get moveable ones, which have wheels, and you can also get strange half-tunnels that lower into conventional cloche position.

Moving on from the portability question, what is an actual polytunnel? Well, a lot of scaffold type poles and even more plastic, which although not biodegradable actually has quite a short life due to the effects of the sun. Ben Rayner reckons that the expected life of a ‘tunnel is 4 to 5 years. He says “Accordingly I would attempt to treat them as separate expenditure and include them within a short life asset pool”.

I wonder whether we should include the whole cost as an asset though? It seems to me that there is an argument of saying that the frame is an item of plant – a moveable structure, if not just plain scaffolding, but the plastic requires different treatment. Paul  “guessed” that it depends on the size / materiality of the expenditure. He says that he has “always tended to write polytunnels off as revenue under "growing plastics". I can see why that happens, plastic is purchased in bulk and tends to be expensed as a matter of course.

In John’s case though the whole tunnel i.e. frame and plastic appears to be one kit. If so then it seems perverse to apportion the cost, far easier to treat the whole as plant or structure.

So what is the correct answer? I am going to stick my neck out and suggest like Paul, that this might depend on the size of the tunnel. The little ones are clearly moveable, and dismantled and re-erected, and I think no different than large cloches. These must be plant.

The big ones though (and I mean massive ones) are surely just glasshouses made of modern materials, so the they would be structures, but their upkeep and acres of plastic could then be expensed thereafter. This treatment is more in line with current planning policy, which says that agricultural polytunnels require planning permission. This does not appear to be a requirement for small greenhouses or polytunnels though.

It would be sensible for HMRC to publish some timely guidance on this topic.

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By pitsfordcruiser
11th Mar 2008 16:16

Garden Buildings - capital allowances?
On a similar tack - depending upon how you look at it - I have a client who has erected a garden building for use as an office for his wife's consultancy business. It cost him £15k + VAT. I am asked "can i claim it as capital?"
My initial answers bring in the CGT implications of claiming it as a business asset and including it in the sale when the house is eventually sold, but I am keen to know whether it would be an economic benefit to have it treated as capital, particularly as the CGT rate will only be 18% soon !
Is this building plant? or just too big to be moveable - so what could my client claim for, apart from furniture etc installed inside it?

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By mike19444
04th Dec 2006 18:33

How does the local authority treat them
If you don't need planning permission, they can't be structures.
And vice versa.

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By kevin9
01st Dec 2006 15:19

is it plant &machinery?
See tax case "Gray v Seymour Garden Centre", in which it was held that a simple glasshouse did not qualify as plant for CA's purposes. This case seems to have been decided on two points:-
1. It was part of the premises in which the trade was carried on, and
2. It was a fixed structure.

See tax case "Thomas v Reynolds & Broomhead" in which an inflatable tennis court cover was held to not be plant. This case appears to have been determined based on the fact that the tennis court cover merely provided shelter for the business activities and did not form any functional part of them. This seems to me to have been an unfair decision.

The Revenue consider that most glasshouse structures are the setting in which a grower's business is carried on and therefore do not qualify as P&M.
CAA2001 s22 defines a "structure" as being a fixed structure of any kind, which is about as helpful as a chocolate teapot. Lord Denning defined a "structure" as being '..something of substantial size which is built up from component parts and intended to remain permanently on a permanent foundation, but it is still a structure even though some of its parts may be movable...'. In view of this I believe that a polytunnel which is moved will not be a structure. I also doubt whether a moveable plastic polytunnel could be classed as the premises in which the trade is conducted so they should qualify as P&M.

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By AnonymousUser
04th Dec 2006 15:05

Polytunnels as plant
I have a client who uses two large polytunnels for the growing and protection of bonsai plants. He said that the framework lasts for years and the plastic for about 3 years if it is put up properly. He has netting so his plastic has lasted for much longer as it is protected, in fact he has not replaced any since his first accounts with me in 1996. There must be a difference between plants grown in a plastic tunnel hydroponically and those grown in the earth - surely the latter would have to be crop rotated thereby making the polytunnels necessarily moveable?

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