+44 (0) 20 7329 1300

Capital Allowances and Demountable Partitions; To Move or Not to Move?

It is no secret that claiming Capital Allowances on plant and machinery expenditure can be a complicated business. While claiming allowances on business equipment such as computers and chairs is straightforward, fully maximising a Capital Allowances claim on fit outs and property purchases is fraught with complexities.

Even seemingly the most basic question doesn’t have a simple answer, namely; just what is “plant and machinery”? To this day, there is no recognised definitive answer and a vast amount of case law and legislation have to be interpreted when considering the question.

One asset that has been found to be plant in case law and now mentioned in the Capital Allowances Act (CAA) 2001 is demountable partitions. However, there are restrictions that have to be considered before deciding whether a claim on demountable partition expenditure is possible. A recent High Court case on land law may allow more businesses to claim allowances on demountable partitions.

Demountable partitions; a background

Normal solid walls, metal and timber stud partitions are denied Capital Allowances as section 21 List A (1) of the CAA 2001. Assets included within List A are not qualifying and are not plant and machinery. However, section 23 CAA 2001 includes List C, which identifies assets that are not automatically deemed to be non qualifying by CAA 2001 s.21. Item 13 of List C is “Partition walls, where movable and intended to be moved in the course of the qualifying activity”.


CAA 2001 s.23, along with many parts of the CAA 2001 legislation, was essentially moulded by case law precedents. List C encompasses assets that were previously found to be plant and machinery by the Courts. Demountable partitions were held to be plant, and thereby included in List C, in the case of Jarrold (Inspector of Taxes) v John Good & Sons Ltd [1962].

Jarrold v John Good & Sons Ltd involved a company that installed a number of movable internal partitions in their premises. The partitions were essentially fixed but could be moved by the business during the course of the trade to expand offices or create new areas as required. In actuality, the partitions were seldom moved but the Courts found the partitions to be plant as they were “apparatus with which the company carried on its business”. The courts made an important distinction that apparatus such as movable partitions are not excluded from being plant despite the fact they are part of the “setting”. Demountable screens, using similar tests as Jarrold v John Good, were also held as plant in the case of Leeds Permanent Building Society v Procter (Inspector of Taxes) [1982].

HMRC’s own internal Capital Allowances manuals recognise the ruling of Jarrold v John Good & Sons Ltd but also advise that “The ‘John Good’ case does not mean that all moveable partitions are plant” and that movable partitions “need to possess mobility as a matter of commercial necessity” and it is also “worth checking whether they have in fact ever been moved”.  (HMRC Capital Allowances Manual: CA21120).

Riverside Park Ltd v NHS Property Services Ltd [2016] EWHC 1313

This recent High Court case involved a lease break clause dispute between a landlord and tenant. Riverside Park Ltd granted a 10 year lease to a trust under NHS Property Services Ltd, with a break clause within the 5th year of the lease term. The terms of the lease break were that NHS had to give 6 months notice and also to give vacant possession to Riverside on or before the lease break date. In this context, vacant possession meant that the property would be free of the tenant’s chattels and any people associated with the tenant.

Before the lease was granted, the premises were open plan. Riverside Park granted a license to alteration to NHS which included the installation of multiple internal partitions. These partitions were standard demountable metal stud partitions fixed to the underside of the landlord’s suspended ceiling and the top of the landlord’s raised flooring.

NHS, under the lease terms, served their notice to exercise the break. However, they did not remove the installed partitions. Riverside Park argued that the break was therefore not valid as, at the break date, NHS had not removed the partitions they had installed.  NHS defended this as they believed the partitions could be seen as fixtures and fittings which had been annexed to, and become part of, the premises.

The key question of the case, and the main basis for the Court’s findings, was whether the partitions installed were tenant’s fixtures or chattels? The High Court ruled in the landlord’s favour, finding the partitions to be chattels. The partitions were found by an expert witness to be “standard demountable partitions” that were “in no way fixed to the structure”. The High Court concluded that the tenant had not given vacant possession as they had not removed the chattel partitions and accordingly the break clause was ineffective.


It is important to note that Riverside Park v NHS is property law and not a tax case and therefore does not directly correlate to Capital Allowances. However, HMRC guidance manuals state that for all intents and purposes, the distinction between a chattel and a fixture is the same for capital allowances purposes as it is under UK property law ” (HMRC Capital Allowances Manual: CA26025). If within a property law case, the High Court has found demountable partitions to be a chattel, then it is reasonable that a Capital Allowances claim could be made on the same basis.


Based on the High Court findings, it could be argued that demountable partitions installed under a lease agreement with similar vacant possession obligations are chattels. As such, they do not form fixtures or part of the premises structure and are therefore outside the restriction under section 21 List A (1) of the CAA 2001. Capital Allowances are readily available on chattels, as the findings of Yarmouth v France [1887] which stated “plant… includes whatever apparatus is used by a businessman for carrying on his business… all goods and chattels, fixed or movable, live or dead…”


As discussed above, it is important to understand that this case does not set a new tax precedent for claiming demountable partitions. However, the Capital Allowances legislation’s distinction between fixtures and chattels has been influenced by property law in its formation, as explained in HMRC’s own Capital Allowances manuals.

Moreover, the basis to claim on the Riverside case only applies to tenant’s installing demountable partitions under a leasehold agreement with similar break clauses. The lease documents and the licence to alterations would need to be inspected by a Capital Allowances specialist. Further, the demountable partitions installed would have to be annexed to the premises in such a way that they do not become part of the structure.

HMRC may question the basis of such a claim and therefore an expert understanding of the Capital Allowances framework and evidence supporting the claim would be of paramount importance.

Contact Lovell Consulting on 020 7329 1300 to speak with one of our team.

Back to News



OTS Review on Capital Allowances and Accounts Depreciation

Lovell Coffee Seminar Oct, 1 and 15 Nov 2017

New Capital Allowances CPD Semimar Dates


20 Years of Capital Allowances


Lovell Consulting Capital Allowances Student Prize Winner 2017

Lovell Coffee Seminar Sep, Oct and Nov 2017

New Capital Allowances CPD Seminar Dates


Pension Funds and Capital Allowances Interactions


Lexis Nexis Webinar – Capital Allowances in 2017

Lovell Coffee Seminar May and June 2017

New Capital Allowances CPD Seminar Date & Speakers Announced


Employees Claiming Capital Allowances: Caravan Case Demonstrates Hurdles!


Capital Allowances, Corporation Tax Loss Relief & Interest Deductions – Act Now


Corporation Tax Loss Relief & Interest Deductions: Capital Allowances


New 2017 Capital Allowances CPD Seminar Dates Announced


Capital Allowances, Trustees and Tax Havens


Interview: A Little Capital Allowances Knowledge Can Be Dangerous


MBL Seminar Dates Announced (Capital Allowances in Retail, Hospitality & Offices)


2016 Lovell Consulting Capital Allowances Art Prize Voting Begins


Capital Allowances in the Retail Sector

Palm with a plant growng from pile of coins

Free Cash, Tax Savings & Capital Allowances for SMEs Going Green


Student Accommodation & Capital Allowances


Lovell Consulting Capital Allowances Student Prize Winner 2016


Capital Allowances within Offices

MBL Webinar

MBL Webinar – Capital Allowances for Property Surveyors


Capital Allowances & Data Centres


Tax Journal Interview: One minute with…John Lovell, Capital Allowances Specialist


Claiming Capital Allowances and / or Repairs


Commercial Property Standard Enquiries: Capital Allowances

New Picture (54)

LexisNexis Webinar – Tax for General Practice & Capital Allowances


Artful Plant: When Capital Allowances may be Claimed on a Painting

New Picture (44)

LexisNexis Webinar – Commercial Property Law & Capital Allowances


New Capital Allowances Team Appointment – Glenn Ramos

New Picture (48)

MBL Webinar for Property Lawyers and Tax Advisers (Capital Allowances)


Fundamental Changes to Interest Deductions & Impact for Capital Allowances

playground-99509_960_720 - Copy

Capital Allowances within Childcare Facilities & Schools


John Lovell Comments: 2016 Budget – Impact on Capital Allowances: Commercial Property


Capital Allowances Team Announcements


Better Call Lovell for Capital Allowances


Lovell Consulting Capital Allowances 2015 Art Prize


LexisNexis Capital Allowances Webinar with John Lovell & Ronak Shah


Plant in Garden Centres: Claiming the Right Kind for Capital Allowances


Can an Accountant Claim the Capital Allowances without Specialist Support ?

New Picture (33)b

John Lovell Capital Allowances talk at Chartered Institute of Taxation Conference


Enterprise Zones & Capital Allowances


Capital Allowances & Landlord Contributions to Tenant Fitting Out Works


10 Key Qualities To Look For In A Capital Allowances Advisor


Capital Allowances within Private Member Clubs


Effective Dealing with HMRC for Capital Allowances

Taxation Feedback Article

Taxation Feedback: Capital Allowances


Capital Allowances within Restaurants


Capital Allowances within Nursing Homes

Little Book

Little Book of Big Capital Allowances Savings


Real Estate Investment Trusts: Get The REIT Advice on Capital Allowances


Wind Turbines and Capital Allowances

cont land

Contaminated Land – The Big Clean Up for Capital Allowances

New Picture (20)

Capital Allowances & Furnished Holiday Lets


Capital Allowances Hidden Gems within Hotels


Helpful Tips for Claiming Capital Allowances in Tax Returns


Why Do I Need A Capital Allowances Specialist?


Land Remediation Relief & Capital Allowances Q&A

Inspired Capital Allowances Savings_Page_1

Inspired Capital Allowances Savings


Private Rented Sector (PRS) & Capital Allowances: Key Planning Points


Drafting For Purchase Contracts And CPSE Capital Allowances Responses

The Great Hall, University of Reading

Lovell Consulting Capital Allowances Student Prize Winner 2015

George Osborne Summer Budget 2015

Summer Budget 2015: Property Tax Updates & Impact for Capital Allowances


The Benefits of Claiming Annual Investment Allowances


Lawyers Should Seek Specialist Capital Allowances Advice


The New Environment For Capital Allowances

Capital Allowances demolition costs

Capital Allowances – Demolition Costs

Capital Allowances - Asbestos Removal

Capital Allowances – Asbestos Removal

wooden-judges-gavel-1024x678 (2)

Capital Allowances Case Summary: Bowerswood House Retirement Home

wooden-judges-gavel-1024x678 (2)

Property Tax Case Summary: Terrace Hill (Berkeley) Ltd: Impact for Capital Allowances


Business Premises Renovation Allowance (BPRA) Case Summary: Senex Investments

Construction Expenditure image

Capital Allowances Savings for Construction Expenditure


Recent Capital Allowances Case Study

wooden-judges-gavel-1024x678 (2)

Capital Allowances Case Summary – Rogate Services


Lovell Consulting Capital Allowances Student Prize Winner

wooden-judges-gavel-1024x678 (2)

Capital Allowances Case Summary – LLPs and AIA

Kirsty and Mike 2

New Capital Allowances Team Members

See Saw 2-10 (2)

Lovell Consulting Capital Allowances 2014 Art Prize


Recent Lovell Consulting Press Coverage: Capital Allowances


April 2014 Capital Allowances Fixtures Rules


The Budget of 19 March 2014 Announced a Number of Capital Allowances Changes


Capital Allowances Case Update – The Granleys

Holiday Lets 2

Capital Allowances on Furnished Holiday Lets


Capital Allowances Case Update – Wetherspoon


The Budget of 23 March 2012 Announced a Number of Capital Allowances Changes