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Acorn Venture – Capital Allowances on camping pods

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In this case, the First-tier Tribunal (FTT) considered whether capital allowances were available on ‘camping pods’ installed by the taxpayer at two sites in the Brecon Beacons. These are prefabricated timber structures with a tin roof, providing basic sleeping accommodation akin to tents but intended to provide greater durability, security and luxury. The taxpayer had installed two types of pods: ‘Basic Pods’ which were designed for use by children and simply provided sleeping facilities, and ‘Teacher Pods’ which included toilets/washing facilities and a very basic ‘kitchen’ area. In general, plant and machinery allowances are not available for buildings or fixed structures, but there is an exception for “moveable buildings intended to be moved in the course of the qualifying activity” which was considered in this case.

The FTT had to determine whether:

  • The pods constituted fixed structures;
  • The pods constituted buildings; and
  • If yes, whether they met the definition of moveable buildings intended to be moved.

All the pods were found to be structures, but as the Basic Pods were simply held in place by their own weight, they were found not to be fixed structures. The Teacher Pods differed by virtue of the plumbing required and therefore were found to be fixed structures.

The term ‘building’ takes its ordinary meaning for capital allowances purposes (as reiterated in the recent Urenco decision), and here the FTT determined that the Basic Pods were lacking sufficient substance to be considered buildings, but the Teacher Pods, offering additional facilities and comfort, did meet the definition.

As HMRC had conceded that the pods would be plant at common law, this was sufficient to determine that plant and machinery allowances should be available for the Basic Pods.

With respect to the Teacher Pods, the FTT then considered the final issue. They adopted HMRC’s formulation of this question, which contained three tests:

  1. Is the building moveable?;
  2. Is it intended that the building be moved at the time of making the capital allowances claim?; and
  3. Is the movement in the course of (rather than simply for the purposes of) the qualifying activity?

The FTT concluded that the Teacher Pods were moveable, as they are no more challenging to move than builder’s portacabins which are accepted by HMRC as being moveable.

However, on the second test, the claim was made in the 2015 period and was covered by the Annual Investment Allowance, giving 100 percent relief in the year. Despite a contemporaneous file note from the accountant noting that the taxpayer confirmed that the pods were moveable and would be moved if bookings were down at the site, this was not deemed sufficient to demonstrate intention to move.

The third test was not reached, although the FTT noted that it would have considered the movement to be in the course of the qualifying activity (although it is unclear precisely what the basis for any distinction would have been).

Interestingly, formal plans were drawn up in 2019 and a quote was obtained to move the pods, although they were not actually moved. The FTT considered this did demonstrate intention to move, and as such in the 2019 period the relevant tests would have been met and allowances would have been available (albeit via writing down allowances rather than AIA).

While moveable buildings are a narrow asset class, the same tests apply to moveable partitions, which occur more frequently. It has long been a standard query by capital allowances specialists to clients whether partitions are intended to be moved, but under the FTT’s rationale here a simple affirmative response is not necessarily sufficient and some further level of evidence may be required to substantiate a claim.

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