HM Revenue and Customs Brief 32/12
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3rd December 2012
Plant and Machinery Allowances: polytunnels
1.1 Previous view of HMRC
Section 22 of the Capital Allowances Act 2001 (CAA)
specifically prohibits expenditure on the provision of a ‘fixed
structure’ from qualifying as expenditure on plant or machinery (unless
one or other of the exceptions in section 22 or 23 apply). HM Revenue
& Customs (HMRC) previously considered that most polytunnels
should aptly be viewed as fixed structures, and/or that, in some other
cases, they might aptly be viewed as premises or setting, rather than
as plant or machinery. However, this view was not entirely shared by
businesses, tax practitioners or representative bodies, such as the
National Farmers Union (NFU), NFU Scotland and British Summer Fruits.
1.2 Current view of HMRC
HMRC accept that the use of polytunnels, as a modern farming
technology, has developed over time. Following discussions with the
NFU, NFU Scotland and British Summer Fruits, HMRC also accept that some
polytunnels are not most aptly classified as ‘fixed structures’ and
that neither is it appropriate to regard some polytunnels as simply
providing the premises or setting for the fruit growing activity. Given
this, HMRC agree that polytunnels that are neither ‘fixed structures’
nor premises/setting should qualify for plant and machinery capital
allowances under Part 2 of CAA.
HMRC have, however, been unable to accept the proposal by
representative bodies that all polytunnels should be regarded as plant,
because the uses to which polytunnels may be put by businesses are
extremely varied, and farming techniques involving polytunnels may, of
course, continue to evolve over time.
Which polytunnels may or may not qualify for plant and machinery
allowances will depend on the facts of each case, including the exact
use of the polytunnel in any particular business. However, HMRC
consider that certain types of use will qualify for plant and machinery
allowances, and will now issue revised guidance to its staff setting
out the type of use that does not mean that allowances are prohibited,
assuming that the other conditions for relief are met.
1.3 Revised guidance
CA 22090 is to be revised with immediate effect in accordance
with the text below.
1.4 Open and settled cases
For all open claims HMRC will now consider those claims in
line with the revised guidance below. Where information is held that
enables the enquiry to be settled without further action, letters will
be issued confirming that the matter is now settled in accordance with
the updated version of CA 22090. In open claims where insufficient
information is held, fact finding letters will shortly be issued and
the cases will be considered in light of the updated guidance, once the
further information has been received.
HMRC are aware that a small number of cases may have been settled where
the business made a claim to plant and machinery allowances and the
claim was refused in accordance with HMRC's view of the law at that
time, although the claim would probably have been admitted, based on
HMRC's updated view. Where a business has had a claim refused based on
HMRC's previous view they should contact the office that dealt with the
claim to ask for the matter to be reconsidered in light of this Revenue
& Customs Brief.
1.5 CA 22090
CA22090 - Plant & Machinery Allowances (PMA):
Buildings & structures: Glasshouses and Polytunnels
Most glasshouses are not plant or machinery. They are
buildings or structures and so are excluded from plant or machinery
allowances CA22010 and CA22020. In the case of Grays v Seymours Garden
Centre (Horticulture) 67TC401 a planteria, which was effectively an
unheated glasshouse, was held not to be plant.
Accept that a glasshouse and its attendant machinery are
inter-dependent and form a single entity which functions as plant in a
grower's business if the following conditions are satisfied:
A.The structure and the equipment were designed as one unit
to operate as a single entity.
B.It incorporates extensive computer controlled equipment,
without which the structure cannot operate to achieve the optimum
artificial growing environment for the particular crops involved.
C.The equipment was permanently installed during the
construction of the glasshouse.
D.The equipment includes computer systems which control:
- boiler and piped heating systems,
- temperature and humidity controls,
- automatic ventilation equipment,
- automatic thermal screens or shade screens.
Depending on the crops grown, the equipment may include:
- equipment for carbon dioxide enrichment of the glasshouse
atmosphere (for example for tomatoes or cucumbers),
- hydroponic culture (for tomatoes and capsicums),
- mobile benching or transport tables (for pot plant
- lighting to control day length or to supplement natural
light (for pot and cut chrysanthemums and plant propagators).
A glasshouse that qualifies as plant is likely to be used for
year round growing of high value crops. Without the benefit of a
closely controlled environment there would be a limited growing season
around the summer season.
A polytunnel is usually a metal framed semicircular tunnel
covered in polythene that is used predominantly by the farming and
horticulture industry. If a polytunnel is a fixed structure it is
excluded from plant or machinery allowances CA22020.
The exact use of the polytunnel can vary. As well as its use
for growing plants, it may also be used to provide shelter for
livestock, machinery or stores. In these cases it does not really
matter whether the polytunnel is a fixed structure or not (although it
is very likely to be fixed) because its primary, if not only, use is
the provision of shelter and it will therefore comprise part of the
premises or setting in which the qualifying activity is carried on
However where the polytunnel is used for growing plants,
whether or not it is a fixed structure will be crucial, because it is
only possible to consider the function of a polytunnel in a qualifying
activity where it is not a proscribed fixed structure CA22020.
Absent the prohibition in respect of fixed structures, it is
accepted that in relation to the growing of plants a polytunnel does
far more than just provide shelter from the elements. It can provide an
enhanced growing environment for plants, not only increasing air and
soil temperature and humidity, but also extending the crop growing
season and protecting plants from insect infestations.
Neither 'fixed' nor 'fixed structure' is defined in the
Capital Allowances Act. Anchor Intl (at  STC 411 at 421) took the
approach of applying the ordinary meaning to the term. Quite what the
ordinary meaning of being 'fixed' amounts to is not entirely clear.
There is a spectrum of potential definitions of 'fixed'. At one end of
the spectrum 'fixed' could mean simply that the structure is set in
place so that it does not move. At the other extreme it could mean that
it is attached permanently in a certain place on the land such that it
can never be moved intact.
Accordingly, it is necessary to look carefully at the facts
of each case, including exactly how the polytunnel is to be used in the
In relation to strawberry and raspberry crops a key
determinant will be the exact method of cultivation of the crops. Where
strawberries and raspberries are grown in the ground then, as a matter
of fact, the same ground cannot be continually reused. The maximum
growing period for strawberries cannot usually be more than 4 years.
For raspberries it can be slightly longer at 7 years. After the
relevant period of time the crops must be planted elsewhere and the
polytunnels will, therefore, be moved to the new location. HMRC will
accept that, in such circumstances, the better view is that the
polytunnels are not fixed structures, but are rather apparatus or
plant, used in the qualifying activity.
However, where in relation to strawberries in particular, the
crops are grown in raised beds (grow bags on trestle tables, for
example) then there is no need or expectation that the crops will ever
need to be grown elsewhere. In such situations it is far more likely
that the polytunnels should properly be regarded as fixed structures
and, as such, they will be unable to qualify for plant and machinery
In relation to other crops, similar careful consideration of
the facts will be needed to determine whether or not the polytunnel is
a fixed structure. For example, blackberries, gooseberries and
black/redcurrants can be grown in the same location for ten years or
more and in relation to such crops it is far more likely that the
polytunnel will be a fixed structure.
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Article Published/Sorted/Amended on Scopulus 2012-12-10 09:06:36 in Tax Articles