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Chapter CG60282

Document Cited authorities 1 Cited in Related
Vincent
Published date12 March 2016
Record NumberCG60282
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

Definition

Fixed Plant and Machinery as Part of a Building

Definition

The term `fixed plant or machinery’ is not defined in TCGA92 and is therefore to be given its ordinary meaning. From the context of TCGA92/S155, it is clear that the term is not used in the sense of fixed capital as opposed to circulating capital or fixed assets as opposed to current assets. If it was used in that sense, there would be no need for Classes 2 and 3. Those classes also deal with plant and machinery which is a fixed capital asset of a trade.

The word `fixed’ is therefore a description of the physical state of the asset in the use to which it is put.

Plant and machinery which of its nature is mobile, is not within Class 1B. Motor vehicles and other wheeled or tracked vehicles (such as heavy tractors) do not qualify (EW Williams & Others v Evans 59TC509) where their function in the trade is as vehicles. Where a vehicle is kept in a permanently fixed position, for example for display in a museum, however, it may be regarded as fixed plant or machinery.

The question of whether an item is fixed plant or machinery is one of fact and degree to be decided by four basic tests.

  1. The first test is whether, in the context of the particular trade, the object is plant or machinery as opposed to, for example, trading stock, or part of a building, see below.
  2. The second test is whether the trader intends to hold the object in a particular location indefinitely for use in the trade carried on by him. For example, if the trade is to hire out the object for use by another, it is unlikely that the lessor intends it to be fixed in the function which it performs in the lessor’s trade. This is so even though it may be fixed in its use in the lessee’s trade.
  3. The third test is whether the location of the object in a particular site is essential to its function in the trade. For example, it will not normally matter precisely where in an office a desk or bookcase is located. If, however, the items are on display in an historic house and are intended to show how a particular historic figure lived and worked, the...

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