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Can SBA be claimed on shipping containers?

Shipping containers used in the trade for storage

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This company uses shipping containers to provide storage for surplus stock. These are not moved once located on site. Historically they have purchased some every year and treated as non qualifying for capital allowances, on the basis that they are premises rather than plant. The query has now arisen whether these might qualify for the structures and buildings allowance. However, to claim SBA you need to acquire a building or structure, which includes something that is 'constructed' (which I have intepreted to mean constructed on site, but perhaps incorrectly?). This suggests that a container would not qualify as I do not consider it to be a building, and although constructed by someone at some point this is not on site. This leaves no allowances, which does not seem right, as if they built a shed for storage purposes this would qualify. I would be interested to know if anyone has a view on this?

Replies (19)

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By Hugo Fair
29th Jul 2021 21:26

Well I can't see anything in https://www.legislation.gov.uk/uksi/2019/1087/regulation/2/made that provides a definition of 'building or structure' ... but that may just be the end of a long day.
However, my gut feeling (I can feel TD's pain as I typed that) is that a container, unless specifically converted (into accommodation or whatever), is unlikely to be accepted by HMRC as constituting a building or structure for the purpose you want.
Others of course may know better?

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boxfile
By spilly
29th Jul 2021 22:21

The containers might not be moved once on site, but they are still capable of being moved.
Whereas a shed is built on site and is not usually considered portable.

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By Property Tax
29th Jul 2021 23:11

To my mind, assuming the containers are used solely for the storage of trade stock (as opposed to say a canteen, security hut, site office and so forth), then the containers function as equipment used in carrying on the business. The storage containers should therefore qualify as plant in the trade, under CAA 2001, S23(4), List C, item 4 - 'storage equipment'. It does not matter that they are not moved once positioned on site, or that you have previously treated them as non-qualifying for capital allowances.

Therefore the expenditure incurred on acquiring them, should qualify for plant and machinery allowances - main pool.

Items that qualify for plant and machinery allowances are specifically excluded from SBAs under CAA 2001, S270BI. Therefore, if you decide that the containers qualify as plant, you should not have to consider SBAs any further.

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Replying to Property Tax:
Psycho
By Wilson Philips
30th Jul 2021 00:32

Inclusion on List C doesn’t mean that something is plant - it means that it is not a building or structure. You still have to get over the usual hurdles re functionality v setting etc. Everything is moveable if you have a big enough hammer - the test is whether something is intended to be actually moved regularly in the course of the business, not whether it is capable of being moved.

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Replying to Wilson Philips:
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By Property Tax
30th Jul 2021 09:06

The physical nature of the asset is significant (in addition to its use in the trade as purely for storage), and results in it being "rescued" by item 4, List C from being kidnapped by S21 Buildings. Typically, a shipping container is not fixed, so it is not a structure - S22(3)(a).

If it were a building constructed with foundations, etc, then yes - it would be a building under S21. It would not come under item 4, List C. It would not be plant.

Regarding your angle of the test being whether it is intended to be moved in the course of the trade - it seems you are thinking about demountable partitioning. We are dealing with storage equipment here.

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Replying to Property Tax:
Psycho
By Wilson Philips
30th Jul 2021 09:18

I’m not sure if you’re getting my point. Inclusion on List C does not mean that something is plant.

I’m not thinking of demountable partitions, simply whether something is moveable, ie intended to be moved. A portacabin might qualify as plant, it might not. A ship might qualify as plant, it might not. It all depends on facts and circumstances not simply whether it is on List C or not.

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Replying to Wilson Philips:
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By Property Tax
30th Jul 2021 09:53

Okay then. You mention portacabins and ships. How about I mention mezzanine floors. The intention of something to be moved, is not a factor in most cases.

Do you think think the shipping containers here should not qualify as plant and therefore qualify for SBAs? If so, why?

The combined operation/interaction/interpretation of S21, S22 and S23 has subetly changed recently.

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Replying to Property Tax:
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By Tax Dragon
30th Jul 2021 10:01

I agree with the OP. No P&M allowances and no SBAs.

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Replying to Tax Dragon:
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By Property Tax
30th Jul 2021 10:33

That would mean it is not a building, structure or plant. Even though it is an asset used as storage.

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Replying to Property Tax:
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By Tax Dragon
30th Jul 2021 10:47

And that is consistent with what the OP has told us.

If it's effectively part of the premises, it's likely not plant.
I think you said (someone said) it's not a structure.

It's also not a building (I don't need you or the OP to tell me that one!)

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Replying to Property Tax:
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By Moremi23_2021
30th Jul 2021 10:49

Thank you everyone, some interesting responses. I think you've summed up my problem right there. Although I am struggling to convince myself that these containers qualify for allowances under either heading, it appears to leave me in a position where I am saying they are not a building or structure and they are not plant and machinery, so what on earth are they?

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Replying to Moremi23_2021:
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By Property Tax
30th Jul 2021 11:17

These are fixed assets in the business. My opinion is that these containers are plant - no doubt in my mind.

But if you do not believe they are plant, then the only other thing they can be is the premises - be it a building or structure.

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Replying to Property Tax:
Psycho
By Wilson Philips
30th Jul 2021 11:21

You can mention mezzanine floors if you want, but it’s not really relevant. Some mezzanines will qualify, some won’t, but that’s more to do with degree of affixation rather than moveability. The point about intention to move is relevant in cases where moveability is a determining factor. I go back to my portacabins - they’re all moveable but if a business uses one in a fixed location as an office that is unlikely to qualify. On the other hand, those that are moved from building site to building site may well qualify.

In this case, without having the full details, I would probably claim PMAs. On the basis that it is a glorified cupboard just as a qualifying mezzanine is a glorified shelf. I was simply making the point, which is often overlooked, that inclusion on List C does not automatically mean that an item is qualifying plant.

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Replying to Wilson Philips:
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By Property Tax
30th Jul 2021 11:51

You got there in the end with your conclusion. Maybe a cupboard is an unglorified shipping container, but it is still storage equipment.

The concerning and bizarre thing with all this, is that the person is overthinking all this to the point that the storage containers are not plant, a building or a structure.

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Replying to Property Tax:
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By Tax Dragon
30th Jul 2021 12:12

Sounds like you still don't understand s23(3).

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Replying to Tax Dragon:
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By Property Tax
30th Jul 2021 12:21

Sounds like you want to impart to all. You have the floor...its now or never.

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Replying to Property Tax:
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By Tax Dragon
30th Jul 2021 13:05

It's you that needs to prove the point. A thing is not P&M, a building or a structure unless it is one of those things. It's not overthinking to say that - it's lamentable underthinking to fail to realise it. (And indeed most things that most companies buy and sell are none of these things.)

You say they are plant - you need to demonstrate it. You started off well, talking about function and use in carrying on the business, but it quickly became apparent that you were relying on an "it must be one of these things" argument, which is simply false reasoning. Indeed, by 11:17 you had made your error express:

Property Tax wrote:

But if you do not believe they are plant, then the only other thing they can be is the premises - be it a building or structure.

Oh, incidentally premises can be other than buildings and structures too... a double error.

Anyway you can have your floor back. I don't want it. (Turns out it didn't qualify for CAs :-p). IMHO everything that needs saying (on the s23(3) point at least) has now been said - if not in this thread, then in the previous ones.

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By Tax Dragon
30th Jul 2021 11:49

Tax Dragon wrote:

I think you said (someone said) it's not a structure.

Oh my... it might have been Hugo's gut.

OP, if you pick the thread linked below up around the time that Ruddles joins the conversation (and read back to the Steve Kesby comments in a previous thread), you'll see your dilemma isn't new.

Wilson's comment above about portacabins being moved between sites versus other cabins sitting at one site is very analogous to the observation Steve made that containers let to customers for use in their back garden would be plant but containers sited on the owner's premises are probably not plant. There is much good referencing as you read on through:

https://www.accountingweb.co.uk/any-answers/shippingcontainers-qualify-f...

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Replying to Tax Dragon:
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By Tax Dragon
30th Jul 2021 11:43

Tax Dragon wrote:

There is much good referencing as you read on...

St John’s School v Ward (1974) 49 TC 524 doesn't get a mention but is probably worth one.

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