CPA positive over tax

The Construction Plant-hire Association (CPA) has said the Inland Revenue (IR) has responded positively to concerns raised by plant hirers at being refused full first year capital allowances on new kit.

This follows a meeting between the CPA and the IR's policy division to discuss the definition of a leasing business. CPA chief executive Colin Wood said: "The IR understood the need to clarify the definition. Currently plant hire is interpreted as a leasing business, but if a service is provided this interpretation may be modified.

"The IR gave the example of a crane being hired with a driver as a service, meaning that the full first year allowance of 40% applies.

"But what we want to know is: what is the difference between a crane driver providing a service and a digger driver providing a service? The digger driver has to complete the tasks he is set, which can be complex and require considerable skill, in just the same way as a crane driver."

Wood added the IR had conceeded that general plant hired with an operator amounted to a fuller service (than non-operated plant) and, therefore, the full allowance could apply.

"Now it's up to us to help persuade the IR this should be the case," said Wood.

To facilitate this, the CPA is drafting a range of plant hire scenarios for the IR to consider to improve an understanding of the services plant hirers provide. The CPA also wants the definition of leasing to be made clearer.

Currently the interpretation of what is and what is not a leasing business is determined by individual IR inspectors on a case by case basis. "We need the boundaries to be made clearer," said Wood.