Hi all,
A michelin star restaurant has recently spent approximately £160k on plant and machinery and as such wishes to apply AIA as part of their CT claim.
The guidance manuals from HMRC clearly state that AIA is able to be claimed on most P&M assets purchased for use within the business except for the general exclusions (one of which is kitchen equipment).
Therefore, given that this is a restaurant and its business activity is to cook and serve food, the kitchen equipment is an asset used within the furtherance of its business operations, but it is still kitchen equipment mentioned (vaguely) in the general exclusions. Which is the overriding argument in this case??
Could they claim the AIA or are they stuck with WDAs at 18%?
Thanks
Replies (10)
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Where does it say that kitchen equipment is excluded? I cannot find it said anywhere in the Capital Allowances Manual. It was certainly considered to be plant and machinery in the Reese Witherspoon case.
Reese Witherspoon
The Upper Tier Tribunal decision (Basil has linked to a summary of the FTT's decision) is here: http://www.bailii.org/uk/cases/UKUT/TCC/2012/42.html
But it should be noted that the kitchen equipment was not in dispute. It was always considered to be plant and machinery. What was disputed was "splashback" tiling, and, I think, some of the works that the appellant argued were undertaken for the purpose of installing the plant and machinery (the kitchen equipment).
I've noticed though that you consider that the equipment would qualify for WDAs, and you are querying whether AIA would be available. There is nothing to exclude kitchen equipment from qualifying for AIA if all other AIA qualifying conditions are met.
Section 23 - List C
My first port of call in these instances is CA2001 S23 - List C
In this case point 5 would suggest that provided there is a qualifying activity and your client holds an interest in the land that you are on safe ground to claim CAs and the AIA.
Cookers, washing machines, dishwashers, refrigerators and similar equipment; washbasins, sinks, baths, showers, sanitary ware and similar equipment; and furniture and furnishings.
Integral Features
My first port of call in these instances is CA2001 S23 - List C
In this case point 5 would suggest that provided there is a qualifying activity and your client holds an interest in the land that you are on safe ground to claim CAs and the AIA.
Cookers, washing machines, dishwashers, refrigerators and similar equipment; washbasins, sinks, baths, showers, sanitary ware and similar equipment; and furniture and furnishings.
Not looked at this for a little while but I am quite confident that List C is referring to integral features and not plant and machinery. Notwithstanding that technicality the AIA could be claimed on the equipment whether it was integral features or plant and machinery.
As portia has referred there is a case of fine lines which is liklely to apply to your client's circumstances. With fit out costs at such a large sum and tax at stake considerable you'll certainly need to ensure a proper analysis of what has actually been purchased is completed.
Er...
I am quite confident that List C is referring to integral features and not plant and machinery.
No list C lists things that are unaffected by lists A and B.
Ta
I am quite confident that List C is referring to integral features and not plant and machinery.
No list C lists things that are unaffected by lists A and B.
Thanks maybe I should pick up my books before replying :)
Who are the parties involved
Is the asset provider connected to the owner of the business?
Are they trying to avoid the denial of AIA where a re-owned asset is brought into the trade.
If unconnected why would the sellers previous claims affect your client- The seller would have a disposal event and your client an acquisition.
Moving on, the above poster is right in that you should break the expenditure down to its component parts. I am sure they could include air conditioning systems, water systems etc. The AIA is best claimed against integral features first unless they qualify for FYA already, as the ongoing tax relief on the pool is better for non-integral features. Moveable items