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The meaning of “plant and machinery” is notoriously difficult to pin down. The word “plant” typically conjures up images of complex mechanical kit with lots of pipes and switches, but there are some surprising examples of other assets that are accepted as falling within the definition.

Animals offer one example, as long as they do not form part of the trading stock of a business (and as long as they are not the subject of a herd basis election, for which separate tax rules apply). Various types of animals may qualify as plant, and attract capital allowances accordingly.

HMRC guidance to tax officers (in the Capital Allowances Manualat CA 21220) is as follows:

“Accept a claim for PMAs [plant and machinery allowances] on an animal if the animal functions as apparatus with which the trade is carried on and it has an expected life of 2 years or more. For example, it is likely that a horse used in a riding school or show jumping business, a guard dog or a circus animal is plant.

Do not accept a claim that a farm animal such as a horse, cow or sheep is plant, unless it is a working animal such as a sheep dog. Farm animals are normally trading stock and their cost is revenue expenditure that bars a capital allowance claim.”

The Revenue also wrote on the topic in "Farm Tax and Finance" back in January 1984, as follows:

“In order to qualify for capital allowances a trader needs to show that he has incurred capital expenditure on the provision of plant .... Where there has been expenditure on a work horse and the practice has not been to write the cost off in computing profits such expenditure may be treated as capital expenditure on plant for these purposes and a capital allowance claimed.”

There is plenty of case law backing the idea that animals can be plant. Yarmouth v France [1887] 4 TRL 1, in which a cart-horse was held to be plant, is the classic case regarding the definition of plant and machinery, quoted in dozens of later decisions since it was decided back in 1887. The judgment included the following key comments:

“Plant includes whatever apparatus is used by a business man for carrying on his business – not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for permanent employment in his business.”

Elsewhere in the same case, the judge commented:

“It is suggested that nothing that is animate can be plant; that is, that living creatures can in no sense be considered plant. Why not? In many businesses horses and carts, wagons, or drays, seem to me to form the most material part of the plant: they are the materials or instruments which the employer must use for the purpose of carrying on his business, and without which he could not carry it on at all.”

The case of Cole Bros Ltd v Phillips [1982] BTC 208 was concerned with other matters, but the judge commented in an aside that “an elephant might be plant”.

Greyhounds were held not to be plant in Abbott v Albion Greyhounds (Salford) Ltd (1945) 26 TC 39. The reasoning is not clear but it seems likely that the animals did not qualify as plant simply because the poor creatures did not live long enough to do so; their average racing life was under two years and they therefore failed the Yarmouth v France principle that plant must be kept for “permanent employment” (which is generally interpreted to mean at least two years).

By contrast, the human body does not qualify as plant, despite the successful claim by an Egyptian belly dancer in the 1990s that her belly was a depreciating asset.

This article has been adapted by Ray Chidell from the A-Z of Plant & Machinery, written by Ray Chidell and by Lindsay Pentelow. The book, and the complementary Capital Allowances 2014-15, are both published by Claritax Books. Lindsay Pentelow BA, CTA (Fellow), FCA is a tax partner with Mazars and leads the firm’s tax business in the Central Region. He is also co-author of a title on Research & Development Allowances, again available from Claritax Books.