UK Upper Tribunal Clarifies Capital Allowances for Offshore Wind Farm Design and Construction Expenses

Citation: [2023] UKUT 260 (TCC)
Judgment on


In the case of Gunfleet Sands Limited & Ors v The Commissioners for HMRC: UKUT-TCC 2023 260, the UK Upper Tribunal (Tax and Chancery Chamber) addressed a complex dispute involving the taxpayers’ entitlement to capital allowances for expenditures related to the design and construction of offshore wind farms. The primary legal questions pertained to the interpretation of “on the provision of plant or machinery” under s11 of the Capital Allowances Act 2001 and the allowance of design and installation expenses as capital expenditure. Additionally, the case examined the jurisdiction of the tribunal to amend tax return figures and the concept of when an amount in a tax return is “conclusively determined” under Schedule 18 Finance Act 1998.

Key Facts

The appellants, members of a corporate group involved in generating electricity from UK offshore wind farms, claimed substantial capital allowances for environmental and technical study expenses, asserting these as qualifying expenditures under s11 CAA 2001. Disputes arose regarding what constituted the plant, whether the studies qualified as expenditures “on the provision of” plant, and if the expenditures could be considered revenue expenses under s61 Corporation Tax Act 2009.

The First-tier Tribunal (FTT) found some studies to be qualifying expenditures, while others were not. Both HMRC and the taxpayers appealed the FTT’s decision. Additionally, the taxpayers challenged the scope of the tribunal’s jurisdiction due to HMRC’s erroneous calculation of writing down allowances instead of qualifying expenditures in their tax returns.

The legal principles considered in the appealed case are predominantly sourced from landmark cases such as Barclay Curle & Co Ltd v IRC and Ben-Odeco Ltd v Powlson which define the parameters for capital allowances and distinguish between capital and revenue expenditures.

The tribunal referred to these cases to scrutinize whether various study expenditures by the taxpayers had a direct substantive relationship to the provision of the offshore wind farms as functioning plant or whether they were merely advisory and thus not qualifying.

The legal principle from Barclay Curle of “on the provision of plant or machinery” includes costs beyond purchase, extending to installation and transport, where the plant cannot be said to have been provided for trade purposes until it is installed and functional.

Ben-Odeco further refined the principle, emphasizing that expenditure must be evaluated by its effect: is it on the provision of plant or something else? The House of Lords in Ben-Odeco illustrated that the focus is on expenditures directly related to the plant, not on expenditures more remotely connected with it.

The tribunal also discussed the jurisdiction conferred by s50 of the TMA, allowing it to amend self-assessments to correct errors or undercharges, subject to the confines of the “matter in question” or appeal scope as determined by the closure notice’s conclusions.


The tribunal, upon analyzing the case law, dismissed HMRC’s appeal concerning the definition of plant, upholding the FTT’s finding that the wind turbines and cables collectively constituted a single item of plant. This conclusion was influenced by the nature of the wind farm’s operation and design, geared towards a single purpose of generating electricity, thus fitting within the scope of plant under capital allowances legislation.

The tribunal allowed HMRC’s appeal on the design and technical studies, disallowing all challenged expenditures as qualifying under s11 CAA 2001, given that such studies did not constitute actual provision, construction, transport, or installation of the plant but were preparatory steps.

The taxpayers’ appeals regarding the claim for revenue deduction under s61 CTA 2009 were dismissed because the tribunal agreed with the FTT that the expenditures were capital in nature.

The tribunal dismissed the taxpayers’ appeals on Issues 5 and 6, which contested the jurisdiction of the tribunal to alter the self-assessed qualifying expenditure amounts, affirming the powers of the tribunal following s50 TMA and the interpretation of paragraph 88 of Schedule 18.


The Upper Tribunal’s decision in Gunfleet Sands Limited & Ors v The Commissioners for HMRC provides a reaffirmation of established principles regarding the interpretation of “on the provision of plant” in the context of capital allowances legislation. While recognizing the necessity for consistency and objectivity in capital allowances claims, the tribunal emphasizes that preparatory and advisory costs cannot find accommodation within capital expenditure for purposes of allowances. Moreover, the decision clarifies the tribunal’s jurisdiction to rectify erroneous amendments in tax returns in line with the relevant statutory provisions, reinforcing the significance of the tribunal’s role in maintaining the integrity of self-assessment and ensuring that taxpayers pay the correct amount of tax.

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