The term ‘plant or machinery’ has the same
meaning as it has elsewhere in CAA. It is not statutorily defined
but it is limited by the general prohibitions at sections 21, 22
(subject to section 23) and 24 and various specific provisions
within Part 2 of CAA.
You should follow the guidance at CA21010 onwards to
determine whether a particular asset is plant or machinery. No
particular difficulties are likely to arise in connection with
machinery but it may be necessary to consider whether an asset is
plant because it passes the ‘business use test’, see
CA21140.
It is important to note that plant may not qualify for
capital allowances in the hands of a lessor for a number of
reasons, including specific prohibitions and failing to meet the
ownership requirements of CAA01/S11. Notwithstanding the fact that
capital allowances may not be available, leases of such assets are
still leases of plant or machinery if they pass the business use
test.
For example, a lessor might lease central heating systems or
micro-generation systems for use in private houses. Such assets
would not qualify for capital allowances, but if the lease is a
long funding lease that does not matter as the lessor will only be
taxed on its commercial profit. This is so, whether the lease a
long funding lease following an election (
BLM24000 onwards) or otherwise.
Naturally, this does not automatically give the lessee a
right to capital allowances as the usual tests still need to be
satisfied from the perspective of the lessee. Note, however, that
CAA01/S70A deems the lessee to be the owner of the leased
asset.
