(1) Urenco Chemplants Limited and (2) Urenco UK Limited v The Commissioners for HM Revenue and Customs [2022] UKUT 00022 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Mellor,Judge Thomas Scott |
| Neutral Citation | [2022] UKUT 00022 (TCC) |
| Subject Matter | 28 January 2022 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 31 January 2022 |
[2022] UKUT 00022 (TCC)
Appeal number: UT/2019/0142
CORPORATION TAX – capital allowances – expenditure on construction
of a tails management facility at a nuclear site –whether items functioned as
plant—application of functionality test in relevant business—whether
expenditure on certain items was “on the provision of” plant—whether
items which were otherwise plant were ineligible for allowances because
they were buildings—whether any items which were buildings were saved by
List C in section 23 Capital Allowances Act 2001
UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
URENCO CHEMPLANTS LIMITED
URENCO UK LIMITED
Appellants
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S
REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
MR JUSTICE MELLOR
JUDGE THOMAS SCOTT
Sitting in public by way of video hearing treated as taking place in London on 14
and 15 July 2021
Jonathan Peacock QC and Michael Ripley, instructed by Enyo Law LLP, for the
Appellants
Jonathan Bremner QC and Edward Waldegrave, instructed by the General
Counsel and Solicitor to HM Revenue and Customs, for the Respondents
2
© CROWN COPYRIGHT 2022
DECISION
Introduction
1. This appeal concerns entitlement to capital allowances in respect of expenditure
on a major construction project. The First-tier Tribunal (“FTT”) held that allowances
were not available in respect of certain disputed expenditure of approximately £192m
incurred on the construction of a substantial nuclear deconversion facility at Capenhurst
in Cheshire. The Appellants appeal against that decision with permission of the FTT.
2. The allowances in dispute are those available for expenditure on the provision of
plant and machinery. There are no procedural issues in dispute. The various issues relate
to three questions. First, was the item in question plant? Second, if so, was the relevant
expenditure nevertheless ineligible for allowances because the item was a building?
Third, if the building exclusion would otherwise apply, was the item in question saved
by one of the specific carve-outs in the legislation?
Background
3. The Appellants, Urenco Chemplants Limited and Urenco UK Limited (together
“Urenco”), are members of the Urenco corporate group. The group provides
approximately 30% of the global enriched uranium supply for the civil nuclear industry
and has uranium enrichment plants in the UK, Germany, the Netherlands and the USA.
The UK facility is located at Capenhurst in Cheshire.
4. Depleted uranium hexafluoride, or “Tails”, is a radioactive and highly toxic by-
product of uranium enrichment. The disputed expenditure relates to a facility known as
the Tails Management Facility (“TMF”) which was constructed to process Tails safely
by way of “deconversion”.
5. Construction of the TMF was substantially completed in 2018, at a total cost of
£1bn. The treatment for capital allowances of most of that expenditure was agreed. The
dispute relates to some £192m of expenditure which HMRC did not accept was eligible
(the “Disputed Expenditure”). The only issue in this appeal is whether Urenco is
entitled to capital allowances in respect of the Disputed Expenditure, which relates to
particular items within the facilities summarised below.
6. Tails are radioactive, unstable, highly corrosive and toxic. The deconversion
process carried out in the TMF involves removing the fluorine content of the Tails in
the form of hydrofluoric acid, leaving a stable but still radioactive uranium oxide
compound which can be stored more easily. The hydrofluoric acid which is produced
can be sold for industrial use, unless it has any radioactive contamination, in which case
it is safely destroyed. The uranium oxide will be stored at the TMF.
7. The TMF processes Tails from Urenco’s facilities in the UK, Germany and the
Netherlands. The TMF has 8-10 operators on shift at any one time. Certain areas are
designed to be unoccupied save for necessary inspection and maintenance purposes.
To continue reading
Request your trial