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
Replies (6)
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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!
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?
The guidance is at CA23115 and, to my mind, is a little confusing or confused. The guidance tries to differentiate hire from the provision of services and starts off using the Baldwins Industrial Services PLC and Barr Ltd case. This case differentiated between the supply of a crane, which is effectively hire, from the supply of crane plus operator, which is the supply of a service. So far, so good and, basically the guidance could have stopped there as it is perfectly clear. The guidance then goes downhill and says the supply of scaffolding is the provision of building access services and therefore within CIS and therefore a supply of services. A leap too far! The guidance should have made clear that the only reason that it is a supply of services is that it is the provision of scaffolding and its erection on site. If the naughty filter filters it out, the asterisked word is e r e c t i o n!