Capital Allowances Act 2001 section 180A

Energy services providers

Section 180A allows an energy services provider who installs plant or machinery that becomes a fixture in a client's building to claim capital allowances on that equipment, provided certain conditions are met and both parties jointly elect for this treatment.

• Where an energy services provider spends capital on plant or machinery under an energy services agreement and that equipment becomes a fixture in the client's land, the provider can be treated as the owner of the fixture for capital allowances purposes, provided both parties elect for this treatment.
• Several conditions must be satisfied: the provider must not hold an interest in the land, the client must hold such an interest, the equipment must not be for leasing or for use in a dwelling-house, the provider (or a connected person) must substantially operate the equipment, and the provider and client must not be connected persons.
• If the client would not have qualified for capital allowances on the fixture under the normal fixtures rules had the client incurred the expenditure, the provider can only claim if the equipment falls within a class specified by Treasury order.
• The joint election must be notified to HMRC within the normal amendment time limit for the tax return (for income tax) or within two years after the end of the chargeable period in which the expenditure was incurred (for corporation tax).