A fixture is an asset that is installed or otherwise fixed in or
to a building or land so as to become part of that building or land
in law. This means that fixture has the same meaning in the
fixtures legislation as in property law. Any boiler or water filled
radiator installed in a building as part of a space or water
heating system is also a fixture for the purposes of the fixtures
legislation.
Property law distinguishes between chattels and fixtures. A
chattel is an asset, which is tangible and moveable. A chattel may
become a fixture if it is fixed to a building or land. For example,
before it is installed in a building as part of a central heating
system, a central heating radiator is a chattel. Once installed, it
becomes a fixture.
The courts have developed two tests for determining whether
an asset is a fixture or a chattel:
The first test is not conclusive. Some degree of physical
affixation is required before a chattel becomes a fixture. If the
asset cannot be removed without serious damage to, or destruction
of, the building or land, that is strong evidence that it is a
fixture. But it is neither a necessary nor a sufficient condition.
The second test is now accorded greater significance by the
courts than the first. The courts look at the purpose and intention
of the asset and its affixation. If, when viewed objectively, it is
intended to be permanent and effect a lasting improvement to the
property, the asset is a fixture. If the attachment is temporary
and is no more than is necessary for the asset to be used and
enjoyed, the asset remains a chattel.
Where a property is leased, property law distinguishes
between tenant's fixtures and landlord's fixtures. A tenant's
fixture is one installed by the tenant that may be removed by the
tenant during or at the end of the lease. For example shop fittings
are frequently installed on this basis. This distinction is not
relevant for the fixtures legislation. The rules on fixtures apply
to both tenant's and landlord's fixtures.
Normally a person has to satisfy the ownership condition
CA23010 in order to be able to claim PMAs
on an asset. In law, a fixture belongs to the freeholder of the
land. This means that only the freeholder can satisfy the ownership
condition and claim PMAs. For example, a leaseholder who incurs
capital expenditure on a fixture is not the owner of the fixture
and so cannot claim PMAs. The case of Stokes v Costain Property
Investments, 57TC688, confirmed this. Costain had a 99- year lease
over a property and incurred expenditure installing lifts and
central heating that were landlord's fixtures. The Courts held that
Costain had no entitlement to capital allowances because the word
belonging (now ownership) in the plant and machinery legislation
meant absolute ownership and Costain did not own the lifts.
Special legislation for fixtures was introduced in 1985. It
is in Chapter 14 Part 2 CAA01. Broadly, it lets allowances go to a
person who incurs expenditure on the provision of a fixture, either
on installation or by acquiring an interest in the building or land
to which the fixture is attached, provided that allowances do not
go to more than one person at the same time. It treats a person who
incurs capital expenditure on a fixture as the owner (the "virtual"
owner) of the fixture. It prevents anybody else, even the real
owner, being treated as the owner of the fixture for PMA purposes
CA26050. Actual ownership is irrelevant.
A freeholder can only claim PMAs on a fixture if the fixtures
legislation treats that person as the owner of the fixture.
Example Rosebud Developers build Kane house, an
office block, and sell the freehold to Xanadu Properties Plc.
Xanadu Properties Plc installs central heating. Xanadu Properties
Plc grants a long lease of Kane House to Budokan Computers at a
premium. Xanadu Properties Plc and Budokan Computers make a joint
election under CAA01/S183 (1)(e). The fixtures legislation treats
Budokan Computers and nobody else as the owner of the central
heating. Xanadu Properties Plc is the true owner of Kane House
including the central heating but it cannot claim PMAs on it
because the fixtures legislation does not treat it as the owner of
the central heating.
