Expenditure incurred by small or medium-sized businesses on plant and machinery generally qualifies for a 40% first year allowance (FYA). However there are a number of exceptions, one of which is that FYAs are not due where the equipment is acquired for the purposes of leasing. For these purposes leasing includes the letting of assets on hire. Much expenditure by plant hire firms therefore falls within this exclusion. However the Inland Revenue’s view was that FYAs would be available if a service had been supplied rather than just straightforward hire. Its view was that this could only happen if the plant was hired together with an operator and the plant and operator remained under the control of the operator rather than the customer. In almost all plant hire contracts, standard terms of hire place responsibility for control of the plant and operator with the customer. Following a recent contract law case, the Inland Revenue has changed its view so that the supply of plant or machinery with an operator will now be considered eligible for FYAs. This is subject to the proviso that the operator remains with the equipment during its use and that it will be operated by him or her alone other than in exceptional circumstances. For example, according to the Inland Revenue, the delivery and installation of a generator would not be regarded as the provision of a service but the supply of a digger with a driver would be. FYAs will also be due on scaffolding used by scaffolding companies where it is constructed by the providers.