Readers’ forum: Capital allowances

During the course of my practice I often come across an acquisition of assets very often motor vehicles by clients under various commercial arrangements.

Reference is made by clients to PCP (personal contract purchase) HP (hire purchase) PCH (personal contract hire) and leasing (contract hire).

The legislation in CAA 2001 s 67 states in respect of ‘hire-purchase and similar contracts’ that: ‘The plant or machinery is to be treated … as owned by the person … at any time when he is entitled to the benefit of the contract so far as it relates to the plant or machinery.’

In practice however it is not always clear which of the above methods of purchase fall within ‘hire-purchase’ referred to in the legislation for the purpose of obtaining full relief through capital allowances on the purchase. This is depending on...