CA22090 - Plant and Machinery Allowances (PMA): buildings and structures: glasshouses and polytunnels
Glasshouses
Most glasshouses are excluded from PMAs under CAA01/S21 (buildings) CA22010 or S22 (structures) CA22020. However, a glasshouse which meets the following description is unaffected by those exclusions:
'Any glasshouse constructed so that the required environment, namely air, heat, light, irrigation and temperature) for the growing of plants is provided automatically by means of devices forming an integral part of its structure' (item 17, List C, CAA01/S23 CA22030).
Expenditure on a glasshouse meeting this description can qualify for PMAs if the glasshouse functions as plant in common law. Note that in the case of Grays v Seymours Garden Centre (Horticulture) 67TC401 a planteria, which was effectively an unheated glasshouse, was held not to be plant.
Accept that a glasshouse and its attendant machinery are inter-dependent and form a single entity which functions as plant in a grower's business if the following conditions are satisfied:
- The structure and the equipment were designed as one unit to operate as a single entity.
- It incorporates extensive computer controlled equipment, without which the structure cannot operate to achieve the optimum artificial growing environment for the particular crops involved.
- The equipment was permanently installed during the construction of the glasshouse.
The equipment includes computer systems which control:
- boiler and piped heating systems
- temperature and humidity controls
- automatic ventilation equipment
- automatic thermal screens or shade screens.
Depending on the crops grown, the equipment may include:
- equipment for carbon dioxide enrichment of the glasshouse atmosphere (for example for tomatoes or cucumbers)
- hydroponic culture (for tomatoes and capsicums)
- mobile benching or transport tables (for pot plant production)
- lighting to control day length or to supplement natural light (for pot and cut chrysanthemums and plant propagators).
A glasshouse that qualifies as plant is likely to be used for year round growing of high value crops. Without the benefit of a closely controlled environment there would be a limited growing season around the summer season.
Polytunnels
Polytunnels that are fixed structures
A polytunnel is usually a metal framed semicircular tunnel covered in polythene. Polytunnels are used predominantly by the farming and horticulture industry. If a polytunnel is a fixed structure it is excluded from PMAs under CAA01/S22. CA22020
Polytunnels that are not fixed structures
A polytunnel is likely to be a fixed structure and therefore excluded from PMAs.
A polytunnel that is not a fixed structure may qualify for PMAs if it functions as plant in common law.
The exact function of a polytunnel can vary. As well as its use for growing plants, it may also be used to provide shelter for livestock, machinery or stores. In these cases the primary, if not only, function is the provision of shelter and the polytunnel will therefore comprise part of the premises or setting in which the qualifying activity is carried on and will not be plant (see CA21110).
However where the polytunnel is used for growing plants and is not a fixed structure, PMAs may be due. It is accepted that in relation to the growing of plants a polytunnel does far more than just provide shelter from the elements. It can provide an enhanced growing environment for plants, not only increasing air and soil temperature and humidity, but also extending the crop growing season and protecting plants from insect infestations.
Meaning of 'fixed structure'
Neither 'fixed' nor 'fixed structure' is defined in the Capital Allowances Act. In Anchor Intl (at [2005] STC 411 at 421), the Court of Session took the approach of applying the ordinary meaning to the term. Quite what the ordinary meaning of being 'fixed' amounts to is not entirely clear. There is a spectrum of potential definitions of 'fixed'. At one end of the spectrum 'fixed' could mean simply that the structure is set in place so that it does not move. At the other extreme it could mean that it is attached permanently in a certain place on the land such that it can never be moved intact.
Accordingly, it is necessary to look carefully at the facts of each case, including exactly how the polytunnel is to be used in the business.
In relation to strawberry and raspberry crops a key determinant will be the exact method of cultivation of the crops. Where strawberries and raspberries are grown in the ground then, as a matter of fact, the same ground cannot be continually reused. The maximum growing period for strawberries cannot usually be more than 4 years. For raspberries it can be slightly longer at 7 years. After the relevant period of time the crops must be planted elsewhere and the polytunnels will, therefore, be moved to the new location. HMRC will accept that, in such circumstances, the better view is that the polytunnels are not fixed structures, but are rather moveable apparatus or plant, used in the qualifying activity.
However, where in relation to strawberries in particular, the crops are grown in raised beds (grow bags on trestle tables, for example) then there is no need or expectation that the crops will ever need to be grown elsewhere. In such situations it is far more likely that the polytunnels should properly be regarded as fixed structures and, as such, they will be unable to qualify for plant and machinery allowances.
In relation to other crops, similar careful consideration of the facts will be needed to determine whether or not the polytunnel is a fixed structure. For example, blackberries, gooseberries and black/redcurrants can be grown in the same location for ten years or more and in relation to such crops it is far more likely that the polytunnel will be a fixed structure.