Urenco Chemplants Limited & Anor v The Commissioners for His Majesty's Revenue and Customs

Whether a specialised structure is plant or premises for capital allowances is an evaluative question of fact or fact and degree. The tribunal must assess the trade as actually carried on, including any regulatory environment that defines that trade. Safety functions do not automatically make premises plant. Appellate interference requires an identifiable legal error.

A building under section 21 of the Capital Allowances Act 2001 is assessed by ordinary meaning, having regard to physical characteristics and function. Section 23(3) and List C Items 1 to 21 extend to expenditure on the provision of the listed assets. Item 22 is narrower: it concerns alteration of land solely to install separately existing plant or machinery, not construction of the building or structure housing it.

Urenco claimed capital allowances for expenditure on structures forming part of a specialised nuclear-waste treatment facility. The First-tier Tribunal dismissed the claims: most expenditure was not on the provision of plant, and all disputed expenditure was excluded as expenditure on the provision of a building.

The Upper Tribunal set aside the FTT’s decisions on plant and buildings and remitted those issues, but rejected Urenco’s arguments concerning List C of the Capital Allowances Act 2001: [2019] UKFTT 522 (TC); [2022] UKUT 00022 (TCC). Both sides appealed. The central issues were the scope of the plant and building tests, and whether List C Items 1, 4 and 22 applied.

The court, in a unanimous judgment delivered by Sir Launcelot Henderson, allowed HMRC’s appeal on all three grounds. It allowed Urenco’s cross-appeal on List C Items 1 and 4, dismissed the cross-appeal on Item 22, and remitted the relevant issues to the FTT.

1. Plant. The meaning of plant is a question of law, but its application to particular assets is a question of fact or fact and degree. The premises test asks whether it is more appropriate to describe the asset as apparatus used in the business or as the premises in which the business is conducted. The FTT’s evaluative conclusions were not open to appellate correction merely because another view was possible. The UT therefore erred in setting them aside: see Cheshire Cavity Storage 1 Ltd v Revenue and Customs Commissioners [2022] EWCA Civ 305.
2. The FTT understood the actual trade and the stringent nuclear-safety regime. It was entitled to treat shielding, containment and seismic qualification as functions of a specialised setting rather than functions in processing the material. The regulatory environment was relevant to identifying the trade, but did not itself convert premises into plant. The FTT was also entitled to distinguish Wangaratta Woollen Mills Ltd v Federal Commissioner of Taxation [1969] 119 CLR 1.
3. Building. Section 21 of the Capital Allowances Act 2001 uses an ordinary word. Both physical characteristics and function may be relevant. The FTT was entitled to regard the facilities, having walls, roofs and enclosed space, as buildings. The UT wrongly converted questions of weight and evaluation into errors of law.
4. Provision of plant. Expenditure on walls and a floor slab did not become expenditure on the provision of plant merely because supports for plant or pipework were attached to them. The structures remained part of the specialised premises. The distinction between qualifying installation expenditure and more remote or premises expenditure was preserved.
5. List C. In context, expenditure on an item in List C Items 1 to 21 includes expenditure on its provision. The contrary literal reading produced an unintended drafting gap inconsistent with the predecessor legislation and explanatory notes. Item 22 is limited to alteration of land solely to install separately existing plant or machinery. It does not cover constructing a building or structure whose purposes include safety, shelter or provision of premises.

• Court of Appeal (Civil Division) allowed HMRC’s appeal on all grounds, allowed Urenco’s cross-appeal concerning List C Items 1 and 4, dismissed the cross-appeal concerning Item 22, and remitted the relevant issues.
• Upper Tribunal (Tax and Chancery Chamber) set aside the FTT’s decisions on the provision of plant and the provision of a building and remitted those issues, while dismissing Urenco’s List C appeal: [2022] UKUT 00022 (TCC).
• First-tier Tribunal dismissed Urenco’s appeals against HMRC’s determinations and closure notices: [2019] UKFTT 522 (TC).