'Gunfleet Sands' case to be heard at Supreme Court

The Court of Appeal decision in Orsted West of Duddon Sands (UK) Ltd and others v CRC, previously known as the 'Gunfleet Sands' case, concerns the eligibility of certain project costs for capital allowances (and associated tax savings) has been appealed by HM Revenue & Customs (HMRC) to the UK Supreme Court.

The case centres around the definition of ‘on the provision of’ plant and machinery – specifically relating to pre-construction expenditure and technical studies on a number of offshore wind farms.

It is one of the more significant cases of the last 20 years, as this also deals with how design fees and preliminaries will be treated going forward for all claims.

There is consensus amongst the established capital allowances advisers in the UK that the Court of Appeal (CoA) arrived at a fair and correct decision the last time out. However, given the scale and costs of these substantial infrastructure projects and wide-reaching consequences for claims, it is not surprising that HMRC is looking to challenge the CoA’s previous ruling.

Nearly a year on from the announcement of a consultation on the tax treatment of predevelopment costs at the Autumn Budget 2024, we are also yet to see HM Treasury’s call for information on this subject. This consultation had been postponed in April 2025 due to the significant implications this case has on the issue.

Many property owners and investors (not just those involved in major infrastructure projects) await the outcome from the Supreme Court, and its implications for those progressing any capital projects and making capital allowances claims. If you have current or imminent projects and wish to understand how this might impact your tax savings, please get in touch.