In April 2026, the Supreme Court ruled in favour of HMRC in Orsted West of Duddon Sands (UK) Limited (now named Orsted Schroders Greencoat WODS Holdco Limited) and others v Commissioners for His Majesty’s Revenue and Customs.
The case confirmed that certain professional fees incurred on offshore windfarm projects do not qualify for capital allowances. The Gunfleet Sands case has wider implications for businesses claiming capital allowances on professional fees, surveys and other soft costs related to capital projects.
Our team explores the case and what the implications of it could mean for you.
Background
Companies within the Orsted group constructed offshore windfarms (including Gunfleet Sands) off the coast of England. Claims for capital allowances were made in respect of these assets, both on some of the physical assets installed and elements of professional fees incurred.
HMRC rejected Orsted’s claim for part of the professional fees included, with the focus being on c.£48m of surveys and studies.
These included: Landscape and seascape studies, ornithology and collision risk studies, metocean studies, and various others.
The Supreme Court released its judgement on the case on 15 April 2026, with no further appeals possible, and they ruled unanimously in favour of HMRC.
Based on the current 25% rate of Corporation Tax for simplicity, denying claims on this amount of expenditure will result in lost tax savings of c.£12m over time.
What was the argument?
The crux of the case was the definition of what expenditure was incurred “on the provision of” plant and machinery and could therefore be included in a claim for capital allowances.
The Supreme Court ruled that being “on” the provision of plant and machinery indicates a narrow test – meaning a close connection is needed between the expenditure and the plant or machinery that is provided. They noted that looser tests, such as “in connection with”, “relating to”, or “with a view” to, exist elsewhere in tax legislation.
All parties agreed that the term “on the provision of” can expand further than the direct purchase cost of a particular asset. The parties did not agree, however, on how far this expansion goes.
The Supreme Court did not attempt to define exactly where this boundary lies, but found that the surveys and studies in question here were not close to the boundary and so did not qualify for capital allowances.
What does this mean for you?
If you are a tax paying business that is incurring expenditure on capital projects that involve professional fees, such as property projects or infrastructure projects, then this ruling will be relevant for your capital allowances claims.
Whilst the ruling does not give absolute certainty over what can and can’t be claimed on, it makes it clear that the availability of capital allowances on professional fees and other ‘soft costs’ is dependent on how closely linked those fees are to the physical assets included in the project.
Get in touch with our team today
At PKF Smith Cooper, we provide expert capital allowances services across the Midlands, and our expert team can help you uncover significant savings on your business assets and guide you through the process of claiming your rightful allowances.
With the current availability of accelerated reliefs such as Full Expensing, and this case meaning an understanding of initial design works is more important than ever, it is best to engage specialist advice early in the process of a capital project to get the best result from a capital allowances perspective. Contact our specialist team to find out more.
