We were appointed by an owner-operator of a large Anaerobic Digester plant to review their development shortly before the sale of the asset to a private equity business (the capital allowances claim being a required part of the legal due-diligence). Works on the asset had commenced almost 10 years earlier, with various site changes required as the performance output was increased over the years.

The £16m spent during the development was well documented from an accounting perspective, but not from a cost analysis perspective (i.e., lots of invoices for buildings materials, but with the client acting as main contractor, there was no indication of where the materials had been used on site). We used our expertise as chartered Quantity Surveyors to prepare reconstruction cost breakdowns for, not only the structures and plant we documented on site, but also the groundworks and structures that had been constructed and removed over the years (as the removed structures would need to be excluded from the claim).

The review yielded a claim for capital allowances for around 91% of the total expenditure. The majority of the non-qualifying costs related to works undertaken but subsequently removed from the site over the years.

Many green power projects (solar, hydro, wind, AD, etc.) fail to recognise the benefit of a detail capital allowances review, opting to instead claim allowances on 100% of the costs. This overlooks the associated works costs that often sit alongside a development, such as haul roads, s106 works, s278 agreements and works to substations and associated structures.

Anaerobic Digester Plant

CASE STUDY