Orsted West of Duddon Sands (UK) Limited and others (Respondents) v Commissioners for His Majesty's Revenue and Customs (Appellant)

Permission to Appeal application lodged

Case summary
Appeal
Previous proceedings

Case summary

Case ID

UKSC/2025/0069

Parties

Appellant(s)

The Commissioners for His Majesty's Revenue and Customs

Respondent(s)

Orsted West of Duddon Sands (First Respondent), Gunfleet Sands II Limited (Second Respondent), Gunfleet Sands Limited (Third Respondent), Walney (UK) Offshore Windfarms Limited (Fourth Respondent)

Issue

Whether expenditure incurred on studies used to inform the development of wind farms falls within the scope of “qualifying expenditure” for the purposes of the Capital Allowances Act 2001.

Facts

This is a case about tax and capital allowances. Ørsted owns and operate offshore wind farms. As a result, it spends money on studies and surveys to evaluate sites proposed for development as wind farms (e.g. in terms of geographical and environmental suitability). This case is concerned with a series of studies and surveys carried out in relation to four wind farms. The studies were carried out prior to the wind farms becoming operational. The question is whether, or to what extent, capital allowances can be claimed in respect of that expenditure so as to reduce Ørsted’s tax liability. That depends on whether or not the costs of those studies fall within the meaning of “qualifying expenditure” as set out in section 11(4) of the Capital Allowances Act 2001, which provides that (as a general rule) qualifying expenditure must (among other things) be “capital expenditure on the provision of plant or machinery”. The First-Tier Tribunal held that the Respondents were entitled to capital allowances in relation to some but not all of the studies. The Upper Tribunal disagreed – none of the studies qualified. The Court of Appeal allowed the Respondents’ appeal, holding that the studies did qualify for capital allowances. HMRC now appeals to the Supreme Court.