Stephen May v HMRC
This case centred on the ability, or otherwise, to claim a whole facility and involved a tax payer who designed and constructed a grain silo, the description of which does appear to be determined by which side you are on, but described as a “building” by HMRC and a “facility” by the Tribunal, to be neutral.
The tax payer, whose occupation was that of a farmer, growing and harvesting grain, commissioned a purpose made silo for storing grain for future sale. The storage process requires moisture removal, to specific levels, maintaining the quality of the grain to enable the grain to be sold, and where certain levels are met, at a higher price.
HMRC rejected 80% of the costs, with the evidence of an ex HMRC employee stating that internally HMRC thought there was merit to the claim, but that HMRC current practice was not to accept it.
Some may suggest that this is not a fair and equitable way to treat a tax payer, and that HMRC should not reject claims without reason, but consider the evidence and come to their own judgement. However, HMRC did note that it is up to the tax payer to demonstrate the case and relief that they are claiming.
The two key areas to this case surround the definition and meaning of a silo, and of “temporary use”. The building, for all intense and purpose, is a “barn / shed”, but upon further investigation, the tax payer demonstrated it has been specially constructed, including the walls being an extra thickness, as well as part movable, special floors, ventilation apparatus, and a complete building designed to remove moisture from the grain. This design was to meet the specific requirements of storing grain and keeping it in the condition required.
During the process, other cases were referred to in assisting to distinguish between what is a building or structure, and what is an apparatus of a trade. It was also agreed that the building had no other use, other than as a silo.
The other point refused by HMRC was that the building was not used on a temporary basis for storing the grain. However, the tax payer’s argument was accepted on the evidence that the grain was kept up to 9 months with a period of disuse whilst the grain store was prepared for the next harvest. It would be difficult to see why this is not a temporary storage, and it is a product for sale, and has a life span of maximum 10 months.
As with all cases for claiming buildings and structures, the Directors of Veritas Advisory have successfully claimed numerous “facilities” for tax payers, with special attention to understanding a tax payers trade, the facility, case law and how to demonstrate and argue this with HMRC. We are not surprised by the fact that HMRC initial reaction is the dismiss the claim, before considering the evidence that the tax payer has disclosed, as we have had similar cases, which have then been accepted by HMRC.