Inextricably linked

The taxpayer company installed maintained and monitored intruder alarm systems. It also operated a control room containing sensitive surveillance equipment at an undisclosed location in the UK.

In its 2001 and 2002 accounts the company claimed capital allowances in respect of equipment and control room expenditure. HMRC decided that the control room expenditure did not qualify as plant and machinery within CAA 2001 s 25 and denied the claim.

The tribunal noted that the core business of the appellant company had altered when it decided to take on sensitive surveillance work.

This contract had required the company to create a custom-built control room from the surveillance could be carried out. It seemed significant to the tribunal that the works on the control room were only needed because the company had taken on the surveillance work.

Having...