Tax lessons of spud store case

Tax legislation is clear on the definitions of a building and what qualifies for plant and machinery.

Mike Atkin, Rural Manager, WR Partners
Mike Atkin, Rural Manager, WR Partners

However this became something HMRC challenged in a recent case.

A farmer incurred costs of £300,000 on a potato store, which from the outside looked like a commercial warehouse. Various structural elements ensured the quality of the potatoes was maintained for longer, as the potatoes were sold to a crisp manufacturer. The farmer claimed capital allowances on the basis the storage was plant because it carried out a critical function – storing potatoes in the optimum condition until needed.

HMRC argued that the expenditure on the storage for produce was that of a building, in which the store was the premises for the taxpayer’s trade. However, this was rejected.

This case was the second in recent years, the first involving the construction of a grain store. Both highlight the importance of understanding the nature of the business, the expenditure and the tax legislation.

Mike Atkin, Rural Manager, WR Partners

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