ACCA Taxation (F6) Practice Exam

If an asset provides a setting, is it categorized as plant?

1. Yes, it is considered plant

2. No, it is not

3. Only if it is a building

4. Only if it is movable

The correct answer is: No, it is not

In inheritance tax law and taxation regarding capital allowances, the terms used to categorize assets are important. Plant and machinery typically refer to items that are used in a business to carry out its operations, and this can include movable equipment and machinery. However, the term “plant” has specific legal definitions and interpretations. An asset that provides a setting, such as a building or land, does not typically fall under the definition of plant. For tax purposes, a building is classified differently than movable equipment. Buildings are often considered structures and not classified as plant, even if they serve a functional purpose for business activities. The idea behind this classification is recognizable in frameworks that distinguish between various types of fixed assets. Fixed assets are often categorized based on their physical characteristics and their role in the business, and while some fixed assets can be considered as plant, not all assets that provide a setting—like buildings—qualify as such. Thus, the asset in this scenario, which is primarily providing a setting, aligns with the understanding that it is not considered plant for purposes of tax allowances or categorization.