The UK Supreme Court has ruled against Orsted in a long-running case over what can be claimed as capital allowances on offshore wind farms.
The court found that surveys and studies, which the Danish developer argued should be considered capital allowances, are not such spending.
“The requirement that the expenditure must be “on” the provision of plant requires a close connection between the expenditure and the plant provided,” the judgement given by Lady Rose reads.
“The concept of the capital allowance reflects both the gradual deterioration of the asset through the wear and tear and the ultimate need to replace it. The surveys and studies have only a tangential connection with the diminishing value of the windfarm assets.”
As a result, the court said it “does not accept Orsted’s submission that, as the money spent on the surveys and studies would be reflected in its profits shown in its annual financial accounts, those costs should be allowed under the capital allowances regime.”
The Court of Appeal had allowed Orsteds case but the Supreme Court has not overturned that following an appeal by HMRC.
Orsted said the ruling is ”regrettable“.