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130% Super deduction - Hire & Provision of service

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Would plant purchases in the below example be eligible for the 130% super deduction?

A company provides site tempory services to demolition and construction sites, being the installation of tempory power, lighting, security systems, toilets, showers etc. For these works to be done pumps and electrical panels are required(plant), these are purchased by the company and hired to the site for a fee (well below typical market rate), without these plant items the other services cannot be complete. Hire fees make up around 5-6% of the companys turnover with the rest being from the site services provided so the hire is not the main business operation.

CA23115 mentions scaffolding being a provision of building access services and amounts to a construction operation and is therefore more than mere hire. I would consider the above example very similar to that of scaffolding services and therefore eligible but would appreciate any opinions or links to useful information.

Many Thanks

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Danny Kent
By Viciuno
13th May 2022 15:58

Having merely skimmed the guidance I'd be erring on the side of no here.

The second half of the sentence you quote says "by the scaffolding industry", which by the sound of it your clients are not. I also would take issue with the assertion that providing a toilet is a "provision of building access service".

% of company turnover relating to rental fees I don't think is important. Even if it was, your admission that the rentals are way below market rate doesn't do you any favours.

Then again, I've not looked at this in any great detail and I'm sure someone who has will come along soon!

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Replying to Viciuno:
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By MagentaLow
16th May 2022 08:44

It's not in the scaffolding industry no, but the guidance uses this as an example of a construction operation, which I'd say the company in question is involved in.

However the guidance also states the plant may be provided with an operator on some occasions and without on others which makes me believe it may not be eligible, as most of the equipment used by the company does not require a constant operator, only somebody to install, adjust settings, repair, move to a new area on the building site etc.

Thanks for the reply, appreciate your thoughts and hope a few more opinions come up.

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Ivor Windybottom
By Ivor Windybottom
16th May 2022 14:29

Have you considered if the long funding leases rules apply? I assume that the hire is short term so that this is not relevant, but it needs to be considered.

I don't have experience of the situation described, but I read the HMRC manual quoted to be more supportive of situations being a supply of services, rather than plant hire, but this will be very much on the facts.

What does the customer think they are buying? Do they not think they are simply hiring some site equipment that happens to be installed - for example are you not hiring security equipment, rather than providing a site security service?

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Replying to Ivor Windybottom:
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By MagentaLow
16th May 2022 15:22

Thanks for the reply Ivor.

The hire is usually short term so would rule out the long funding lease rules.
I'll try to give an example as the security equipment isn't something hired.

A client may request a complete set-up of a welfare system on a construction site, including a temporary kitchen, toilets and break-room. The company's service would include all the materials (kitchen sinks, toilets, pipe, fittings, cable, plug sockets, lights etc) and labour for the installation. For these areas to be useable requires temporary power and water supplies, so the company supplies electrical panels and pumps on a hire basis as part of the service. Only the company's engineers can install, move, adjust the equipment, so remain in the company's control so to speak. If a pump for example needed to be moved to a different area on a site, the engineers would need to be called in to do this.

I'd appreciate any thoughts with the above in mind.

Thanks again for your reply

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