CA94510 - Structures and buildings allowance (SBA): highway undertakings: carrying on of highway undertakings

CAA01/S270FA(3)-(5)

The public sector, such as a local authority, operates most roads. There are some areas where roads may be constructed and operated by the private sector:

  • where a privately operated toll road is constructed, normally under a concession agreement between a relevant public body and the operator of the road
  • where capital expenditure has been incurred on public highways under a contract with a public body.

This encourages private investment in the road system. Private businesses that take responsibility for the design, building, financing and operating of public highways may be paid sums by a public body, based on the level of use of the road, and on such factors as safety and availability.

The term `highway undertaking’ covers these types of activities.

Where the person carrying on a highway undertaking meets the conditions for claiming the cost of constructing the road as revenue expenditure for tax purposes the SBA will not apply. This guidance does not apply to those businesses, see instead BIM64055.

Where the person carrying on a highway undertaking is not entitled to claim the cost of constructing the road as revenue expenditure for tax purposes, they may be entitled to claim the SBA and this guidance applies.

A person who carries on a highway undertaking will not normally have an interest in the road that is capable of being the relevant interest. Therefore the relevant interest conditions for claiming SBA may not be satisfied. The SBA highway undertakings provisions makes it possible for a person who carries on a highway undertaking to claim SBA.

Definitions

For the purposes of SBA, a ‘highway undertaking’ is an undertaking involving the design, building, financing and operating (‘DBFO’) of any roads to exploit a `highway concession’.

For the purposes of SBA, a ‘highway concession’ is, in relation to a road, either:

  • a right to receive sums from the Crown or any government or public or local authority (whether in the United Kingdom or elsewhere) because the road is or will be used by the general public
  • the right to charge tolls in respect of a toll road.