In this article 4 sections
On 15 April 2026 the Supreme Court handed down its judgment in Orsted West of Duddon Sands (UK) Ltd and others v HMRC [2026] UKSC 12. HMRC won. The decision narrows what counts as expenditure “on the provision of” plant and machinery under section 11(4) of the Capital Allowances Act 2001, and it affects how fees are treated in commercial property claims.
What the case was about
Orsted claimed plant and machinery allowances on the cost of surveys and environmental studies carried out while planning offshore windfarms. HMRC accepted that the windfarms were plant and that the spending was capital. The only question was whether the study costs were expenditure on the provision of that plant.
What the court decided
The court held unanimously that they were not. The word “on” requires a close connection between the expenditure and the plant itself. It is narrower than phrases such as “in connection with” or “relating to”. Costs of transporting and installing plant still qualify, following Barclay, Curle, but that does not extend to every cost that was necessary to bring the plant into existence.
The court also said the incentive purpose of the allowances does not settle where the boundary lies, and that accounting treatment does not decide the statutory meaning.
What it means for property owners
- Professional fees need apportioning properly. Design, engineering and project management fees can still qualify where they relate closely to qualifying plant. A blanket uplift across all fees is harder to defend.
- Preliminaries and site costs should be allocated on evidence, as the Upper Tribunal did in JD Wetherspoon.
- Feasibility and planning-stage studies are unlikely to qualify as plant expenditure. Some may fall within the Structures and Buildings Allowance or other reliefs instead.
- Existing claims are not automatically at risk, but claims open to enquiry that included broad fee allocations are worth reviewing.
How we apply it
Our surveyors and tax specialists already allocate fees and preliminaries item by item. Following Orsted we are documenting the link between each fee and the plant it relates to in every report, so claims stand up to HMRC scrutiny.
If you have a fit-out, refurbishment or development claim in progress, speak to our team.
