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How to claim for ECAs
Claims for ECAs are made in the same way as other
capital allowances on the Corporation Tax Return for companies
and the Income Tax Return for individuals and partnerships.
The Inland Revenue's guidance on the ECA scheme
can be found at
www.inlandrevenue.gov.uk/capital_allowances/eca_guidance.htm.
The Inland Revenue administers claims for ECAs
and they have wide-ranging powers to investigate any aspect of
the return. If errors are identified, any tax underpaid may be
recovered with interest and, in cases of negligent or fraudulent
conduct, penalties. Penalties cannot exceed 100% of the tax that
would otherwise have gone unpaid.
Claims must be based on the costs incurred. Where
you have purchased a qualifying Product that is not already
incorporated into a larger item of plant and machinery you must
use the price paid for the item as the base of your claim. If
you have purchased a qualifying product, which is incorporated
into a larger piece of equipment, the eligible claim value is
provided in the Claim Values section of this site. The remainder
of the equipment can attract capital allowances at the normal
(rather than the Enhanced) rates.
The words ‘on the provision of machinery or
plant’ in the Capital Allowances Act are interpreted narrowly
and exclude remote or indirect expenditure. Some common types of
cost are detailed below:
Direct transportation and installation costs
can be regarded as expenditure on the provision of plant or
machinery. These can include, for example, the costs of
transport, craneage costs to lift machinery in to place, project
management costs, installation, modifications to existing plant
and machinery, and commissioning.
Professional fees
qualify only if they are directly related to the acquisition and
installation of assets that are plant or machinery. Fees
incurred on such things as feasibility studies or design work
are generally too remote from the acquisition and installation
to qualify. The eligibility of such costs is a question of fact
based on the particular circumstances of the case.
Costs of alteration to an existing building
arising as a direct result of the installation of qualifying
plant and machinery may be eligible for ECA. |
