A case has been determined at the Upper Tax Tribunal (UTT). Does a cavity formed to store gas satisfy the requirements to be allowed as plant, or it is merely the premises in which the trade takes place? This is not a straight forward question, and within the ruling lists several of the previous case laws, and the reasoning behind allowing and disallowing plant.
The case, Cheshire Cavity Storage 1 Limited and (2) EDF Energy (Gas Storage Hole House) Limited v The Commissioners for HM Revenue and Customs, the UTT denies and upholds the First Tier Tribunal (FTT) in September 2019, that the expenditure to form the cavity is not qualifying as it acts as premises.
The case is about the taxpayer creating a cavity that can store gas, for the purpose of holding and then selling when the gas prices are higher. The claimant created the cavities by injecting water into naturally occurring salt rock beneath the ground which, when the salt rock dissolves create a hole filled with saltwater. Gas is pumped into the hole, the saltwater displaced, and the rocks surrounds the gas keeping it from escaping.
The case considered several cases, Yarmouth v France, a horse used for the trade, Jarrold v John Good, demountable partitions, IRC v Barclay, Curle & Co Ltd, a dry dock, Cooke v Beach Station Caravans, a swimming pool. Schofield v R & H Hall Ltd, a grain silo, Benson v Yard Arm Club Ltd, if a barge is plant when used as a restaurant, Wimpey v Warland, amongst others.
Plant is not defined, but allowed by applying the tests, which must be satisfied. There have been several capital allowances cases recently; could this be that HMRC are challenging more claims, or that taxpayers are pushing to claim more items, or that new technology will necessitate that we move into the unknown as to whether an item will qualify or not until tested.