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