Cases - J D Wetherspoon plc v Revenue & Customs

Record details

Name
J D Wetherspoon plc v Revenue & Customs
Date
[2007]; [2009]; [2012]
Citation
UKSPC SPC00657; UKFTT 374 (TC); UKUT 42 (TCC)
Legislation

Capital Allowances Act 1990

Keywords
Capital allowances - machinery or plant - refurbishment of public houses - preliminaries - business test - premises test - whether refurbishment works were eligible for capital allowances - whether plant, or alterations to existing building was incidental to installation of plant - Capital Allowances Act 1990, s. 24 and s. 66
Summary

[2007]

The latest case about capital allowances concerned the refurbishment of a number of public houses. The three key areas of expenditure considered were preliminaries where it was held that such costs could be allocated on a pro-rata basis; decorative timber panelling which was found to be part of the premises and so ineligible for allowances; and incidental building alterations of which enclosing walls to toilets and kitchens did not qualify but toilet cubicles and drainage did qualify along with the related sanitary fittings and kitchen equipment.

The parties were unable to apply these decisions about general principles to the numerous other items in dispute and the case returned to the First Tier Tribunal Tax Chamber in mid 2009.

[2009]

The Tribunal decided the following:

  • Splash backs to both toilet and kitchen equipment qualified as incidental works but a fully tiled wall or floor, the plastering behind the tiling and PVC flooring and latex cement did not.
  • Inclined cement flooring and removal of a floor slab and screed to facilitate the installation and drainage of a cold store did qualify.
  • Light fittings in toilets were plant and machinery in their own right and holes, pelmets and dropped ceilings were incidental to the installation of the lighting.
  • Studwork to form a hoist shaft was incidental but not the tiling to the surface of the shaft.
  • Toilet cubicles including block partitions between cubicles, back walls and side walls, and strengthening to timber partitions, were all incidental to the installation of sanitary fittings, but waterproof coating the floor was not.
  • Strengthening of an existing floor and removal of a timber floor were both incidentals to the installation of kitchen equipment.
  • PVC sheet flooring to disabled toilets qualified as incidental works.
  • Decorative cornices and architraves were not plant.
  • Doors and frames and flooring to general areas of toilets did not qualify.

The Tribunal considered around 100 other items and reaffirmed the legitimacy of the pro rata approach to the apportionment of preliminaries, overheads and fees.

Both were unhappy with certain aspects of the decision and their appeals were heard in the Upper Tier Tax Tribunal in December 2011.

[2012]

The Upper Tribunal decided the following:

  • The decorative timber panelling had been correctly found to be part of the premises and so non-qualifying.
  • Only alterations to an existing building purely incidental to the installation of the plant as distinct from being consequential on the installation of plant are within the scope of section 25.
  • The block partitions between cubicles, back walls and side walls were not incidental to the installation of sanitary fittings.
  • Neither were the toilet cubicles nor  the holes, pelmets and dropped ceilings for the light fittings although these items were not appealed by HMRC.
  • The pro-rata approach to the apportionment of preliminaries is correct.

The earlier decisions relating to the splash backs, kitchen tiling and doors, strengthening the kitchen floor, the cold store floor and drainage system, and the hoist enclosure were confirmed as being correct.