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IMH Advisory LLP  were approached by an accountant in relation to claiming capital allowances on their client’s Anaerobic Digestion (AD) Plant, which had been operating for four years.

At first glance, a significant proportion of the AD plant should qualify for Plant and Machinery Allowances (PMA), due its specialist nature.  However, the original contractor had gone into administration, so the underlying cost information was incomplete.

The client’s account showed total additions of £45m, but this included revaluations, bare land and legal fees, which attract no capital allowances.

Therefore, the actual expenditure to be reviewed was £13m.  By undertaking a site survey, reviewing site plans and schematics, but also omitting original expenditure that had been demolished and was now out of time to claim, we identified total PMA of circa 87% of the analysed expenditure.

The AD plant included various specialist equipment, including the digesters and related machinery and pipework, dedicated gas installations, specialist leachate drainage and silage clamps.

For projects that were contracted for and physically started after 29 October 2018, Structures and Buildings Allowance (SBA) will also apply to expenditure that previously obtained no tax relief.  For an AD plant, this will include site infrastructure, such as access roads and general hard standings, as well as the structure of ancillary buildings and offices.