Following Ørsted West of Duddon Sands (UK) Limited and others v Commissioners for HMRC [2026] UKSC 12 (formerly known as the Gunfleet Sands case)

HM Revenue & Customs has updated their #CapitalAllowances Manual (CA20060, CA20070 & CA95010) - further to the Ørsted West of Duddon Sands (UK) Limited and others v Commissioners for HMRC [2026] UKSC 12 (formerly known as the Gunfleet Sands case)

Stating that "The judgment provides clear confirmation of HMRC’s view that expenditure on preparatory studies and surveys of this kind do not qualify for PMAs. The Court found that such costs were not sufficiently closely connected to the actual provision of the plant.

In reaching this conclusion, the Supreme Court reaffirmed that “plant” means the apparatus with which a business is carried on, and that whether expenditure is incurred "on" the provision of plant depends on the facts and circumstances of each case.

The judgment does not establish a new general principle or test for determining when expenditure is incurred the provision of plant and machinery, endorsing the earlier cases of Inland Revenue Commissioners v Barclay Curle [1969] 1 WLR 675 and Ben-Odeco Ltd v Powlson (Inspector of Taxes) [1978] 1 WLR 1093.

It confirms that not all capital expenditure qualifies for PMA, even when this expenditure is necessary for a project to proceed.

As a result, decisions in this area will continue to be highly fact-specific, and the boundaries of section 11(4) [CAA2001] will still need to be assessed case by case."

Additionally HMRC and HM Treasury launched today a Consultation on the Tax Treatment of Predevelopment costs - to gauge levels of 'confusion' and misunderstanding at where the boundary sits.

The consultation will close at  23:59 on 21 September 2026

Do get in touch if you wish to share your thoughts and observations and/or understand how your project expenditure(s) may be impacted.

If you would like to discuss any property tax matters or specific queries relating to the above information, then please do contact the team on 0345 230 6450 or [email protected].  We look forward to speaking with you soon.