28 April 2021

Mark Shaw (TAL CPT) v HMRC; (UT)

The taxpayer successfully appealed against the FTT’s decision to disallow claims to industrial buildings allowances. The decision turned on the meaning of “temporary disuse” for the purposes of CAA 2001 s.285.

The taxpayer had purchased buildings (which the previous owner had ceased to use) in a former enterprise zone and had undertaken to the vendor and made serious efforts to bring the buildings back into use. When those efforts failed, the taxpayer sold the buildings. The taxpayer had claimed capital allowances in respect of the buildings on the basis that they were deemed to be industrial buildings during their period of temporary disuse. HMRC rejected those claims on the grounds that (i) for disuse to be temporary it had to be followed by a period of use, so that even if a building appeared to be in a state of temporary disuse at a given time, if there turns out to be no subsequent period of use (e.g. the building is accidentally destroyed) the period of temporary disuse is transformed into a period of permanent disuse from the start; (ii) CAA 2001 s.319 could be used to “claw back” allowances claimed during the period of (apparently) temporary disuse; and (iii) a taxpayer’s intentions were irrelevant to the question of whether the building was in a state of temporary disuse.

The UT rejected those arguments and held that (i) there was no requirement for a period disuse to be followed by a period of use in order to fall within s.285; (ii) s.319 could not be used in the manner suggested by HMRC; (iii) a taxpayer’s intentions regarding the building were relevant when determining whether or not a building was in a state of temporary disuse; and (iv) on the facts, the taxpayer had intended the disuse of the buildings to be temporary.

Emma Pearce, led by Julian Ghosh QC, counsel, instructed by Ashurst LLP for the Appellant.

You can read the full decision here.