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SSE’s Supreme Court victory over HMRC in relation to the construction of a hydro-electric power station in Scotland is “good news” for renewables investment, a legal expert has said.
Judges have this week unanimously ruled in favour of the company, which was fighting a long-running court case against HMRC in regards to capital allowances it claimed during the construction of its Glendoe power station in Fort Augustus.
SSE’s win means that around £200 million of expenditure incurred on Glendoe qualifies for tax relief.
HMRC disputed certain allowances claimed for tax years 31 March 2006 to 31 March 2012, resulting in the matter being brought before the First-tier Tribunal, Upper Tribunal, and the Court of Appeal, before HMRC appealed to the Supreme Court where the case was overseen by five judges.
The appeal centred on whether construction of a tunnel and aqueduct were eligible for tax relief under rules set out within the Capital Allowances Act 2001.
Speaking in response to the case Angus Walker, planning and infrastructure partner at law firm BDB Pitmans,
added: “This judgment is good news for investment in British renewable energy projects. If the UK is going to reach net zero and ensure the country has sufficient energy capacity, it’s vital that potential investors know that the tax regime will not penalise them unfairly.
“The government might consider clarifying the Capital Allowances Act 2001 so that there does not need to be 14 years of wrangling over a project opened by the Queen in 2009.”
The ruling confirms that around £200 million of expenditure incurred on Glendoe qualifies for capital allowances, which SSE will receive over a c.50-year period as tax relief against the overall taxable UK profits of the group.
An SSE spokesperson said: “This ruling provides welcome clarity on the tax treatment of allowances and credits for essential low carbon assets.
“Such allowances and credits play an important contributory role in low carbon investments and will support the ongoing actions SSE is taking as the UK’s clean energy champion to deliver the homegrown energy infrastructure the country needs.”
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