Attwood (Inspector of Taxes) v Anduff Car Wash Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 01 December 1995 |
| Date | 01 December 1995 |
| Court | Chancery Division |
Chancery Division.
Carnwath J.
Alan Moses QC and Timothy Brennan (instructed by the Solicitor of Inland Revenue) for the Crown.
Peter Whiteman QC and Brian Green (instructed by Denton Hall) for the taxpayer.
The following cases were referred to in the judgment:
Benson (HMIT) v Yard Arm Club Ltd TAX(1979) 53 TC 67
Brown (HMIT) v Burnley Football & Athletic Co TAX(1980) 53 TC 357
Carr (HMIT) v Sayer TAX[1992] BTC 286
Cole Bros Ltd v Phillips (HMIT) TAXTAX(1982) 55 TC 188; [1982] BTC 208
Edwards (HMIT) v Bairstow ELR[1956] AC 14
Gray (HMIT) v Seymours Garden Centre (Horticulture) TAX[1995] BTC 320
IR Commrs v Barclay, Curle & Co Ltd TAX(1969) 45 TC 221
IR Commrs v Scottish & Newcastle Breweries Ltd TAXTAX(1982) 55 TC 252; [1982] BTC 187
Jarrold (HMIT) v John Good & Sons Ltd TAX(1962) 40 TC 681
Schofield (HMIT) v R & H Hall Ltd TAX(1974) 49 TC 22
Wimpy International Ltd v Warland (HMIT) TAXTAXTAX(1989) 61 TC 51; [1987] BTC 591 (ChD); [1989] BTC 58 (CA)
Corporation tax - Capital allowances - Site incorporating buildings and car wash installation - Whether whole site regarded as "plant" attracting capital allowances or whether site and buildings were excluded as premises in which trade was carried on - Capital Allowances Act 1990 section 22 section 24Capital Allowances Act 1990, ss. 22, 24.
This was an appeal by the Revenue from a decision of the special commissioners that the entire site on which stood a building incorporating car washing machinery and control equipment qualified as "plant" for the purposes of capital allowances.
Anduff's trade was operating some 78 car wash sites throughout the UK, each site extending to about 20 metres by 6.5 metres. On each site was a "washhall" incorporating the car wash machinery and control equipment, and surrounding tarmac areas used for circulation. The sites were laid out in accordance with a German system known as the "IMO" system which allowed for four vehicles to pass through the washhall at one time. The IMO system encompassed the design and layout of the whole site.
The evidence was that the site was crucial to the car wash operation, ensuring that cars passed round the site through the washhall, and out again on one continuous conveyor belt.
Held, allowing the Revenue's appeal:
The site on which the car wash business was operated and the building in which the machinery was housed constituted the premises, and performed typical premises functions. The fact that, as a result of the sophisticated design of the site, they performed the function of premises particularly well did not change the nature of that function as the premises in which the trade was carried on rather than "plant" with which the trade was carried on. Wimpy International Ltd v Warland (HMIT) TAX[1987] BTC 591 applied.
1. On 20, 21, 22, 23, 26 and 27 April and 1 November 1993 two special commissioners (Mr THK Everett and Mr DA Shirley) heard the appeals of Anduff Car Wash Ltd ("Anduff") against seven assessments to corporation tax relating to accounting periods ended on 31 December 1984-1990 inclusive.
2. Two separate questions arose for decision in relation to the appeals and they were considered separately. The first question concerned the status of the structures used by Anduff in its trade of operating car washes, claimed by Anduff to be plant; a claim rejected in large measure by the Inland Revenue. The commissioners decided that question in favour of Anduff and issued a written decision in principle to that effect on 17 May 1993. That decision set out the facts found on the evidence adduced and the commissioners' conclusions. Subsequently, on 1 November 1993 the commissioners were asked to decide the date on which the expenditure on part of the plant comprising car washing equipment imported from Germany was incurred by Anduff. That question was decided in favour of the Revenue and Anduff did not appeal the supplementary decision on that point, issued on 22 November 1993.
Accordingly it was only the first decision dated 17 May 1993 which was under appeal.
[Paragraphs 3 and 4 listed the witnesses who gave evidence and the documents proved or admitted before the commissioners.]
5. Figures were not agreed between the parties until 5 August 1994 and on 12 August 1994 the commissioners adjusted the assessments accordingly.
6. The Revenue immediately after the determination of the appeals declared dissatisfaction therewith as being erroneous in point of law and on 24 August 1994 required a case for the opinion of the High Court to be stated pursuant to the Taxes Management Act 1970 section 56Taxes Management Act 1970, s. 56.
7. The question of law for the opinion of the court was whether the commissioners applied the correct principles laid down in the relevant authorities to the facts found in reaching the conclusion that each Anduff site is one single unit of plant within the provisions of theFinance Act 1971Finance Act 1971 and theCapital Allowances Act 1990Capital Allowances Act1990.
Anduff Car Wash Ltd ("Anduff") appeals against seven assessments to corporation tax relating to chargeable accounting periods ended on 31 December 1984-1990 inclusive.
The point at issue in these appeals, on which we are asked for a decision in principal only, is the status of structures (to use a neutral word) used by Anduff in its trade of operating car washes. Anduff claims that the structures in question are plant but that is disputed in large measure by the inspector of taxes. He contends that the structures in question are the sites or premises on which Anduff carries on its trade and is willing to confer the status of plant only on certain items to be found on Anduff sites.
During the relevant years Anduff acquired some 78 sites throughout the UK on which car cleaning facilities were installed. By agreement between the parties the evidence in these appeals has been limited to three sample sites operated by Anduff at Newcastle-upon-Tyne, Greenwich and Cannock in Staffordshire. Of 48 items the Revenue is prepared to accept that only 19 qualify as plant. To this list must be added two further items namely professional fees and local authority fees. It is, however, common ground between the parties in that in so far as those two items can be shown by Anduff to apply to items which are agreed or found to be plant, those fees may rank to that extent as relevant expenditure on plant.
It is common ground also in this appeal that the expenditure by Anduff on the items in dispute was capital expenditure: we are asked only to decide whether the disputed items on the sample sites rank as plant.
The only trade of Anduff is that of operating car washes. It does not sell petrol nor does it operate its facilities on the forecourts of garages or petrol filling stations. Its car wash sites are free-standing, each site being approximately 20 metres long by 6.5 metres wide, which contains the car washing equipment imported from Germany. Most of the remainder of each site is covered in tarmacadam or similar material and laid out with signs and bollards to ensure the smooth progress of customers' cars from the entrance, round the site, through the washhall and back to the entrance/exit. Coin operated vacuum cleaners are also provided to enable customers to clean the interiors of their cars if they so wish, either before or after entering the washhall.
It is the primary contention of Mr P G Whiteman QC on behalf of Anduff that the entirety of each car cleaning site constitutes a single entity and is, in itself, a single item of plant. In the alternative he submits that the entirety of each washhall, with all its equipment is a single unit of plant. Finally, in the further alternative he contends that each of the component parts of the site constitutes an item of plant.
Mr Alan Moses QC who appeared for the inspector in these appeals contends that the sites operated by Anduff are the places or the premises, in which it carries on its business and are not plant.
For the first six accounting periods relevant to these appeals covering the years 1984-89 inclusive it is to the provisions of Finance Act 1971 section 41 section 44ss. 41 and 44 of the Finance Act 1971 that we must turn. For the final year, for the accounting period ended 31 December 1990, the relevant legislation is contained inCapital Allowances Act 1990 section 22 section 24ss. 22 and 24 of the Capital Allowances Act 1990, by virtue ofCapital Allowances Act 1990 section 164s. 164 of that Act. We do not rehearse the provisions of those enactments here as none of them provides a definition of plant. For guidance as to what is plant we must refer to the authorities. The list of authorities grows longer with each passing year and we have been led by counsel through the judgments of the courts of England, Scotland, Ireland (both North and South) and Australia.
The starting point in all cases such as these is of course the judgment of Lindley LJ in Yarmouth v France (1887) 19 QBD 647 where he said at p. 658 that plant:
In its ordinary sense … includes whatever apparatus is used by a business man for carrying on his business, - not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or moveable, live or dead, which he keeps for permanent employment in his business.
It is thus immediately apparent that stock in trade cannot be plant and, it would seem at first sight that the premises on which a business is carried on cannot be plant; what was described by Megarry J in Cooke (HMIT) v Beach Station Caravans Ltd (1974) 49 TC 514 at p. 523 as "where it's at". The appellants in St John's School (Mountford) v Ward (HMIT) (1974) 49 TC 524 failed because the laboratory and gymnasium which were alleged by them to be plant were, at the end of the day only the premises within which the appellants' trade was carried on. That was so despite the special...
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