Thomas v Reynolds

JurisdictionEngland & Wales
Judgment Date30 January 1987
Date30 January 1987
CourtChancery Division

Chancery Division.

Thomas (H.M. Inspector of Taxes)
and
Reynolds & Anor

Mr. Alan Moses (instructed by the Solicitor of Inland Revenue) for the Crown.

The taxpayers appeared in person.

Before: Walton J.:

The following cases were referred to in the judgment:

Benson (H.M.I.T.) v. Yard Arm Club Ltd. WLRTAX[1979] 1 W.L.R. 347; (1979) 53 T.C. 67

Brown (H.M.I.T.) v. Burnley Football & Athletic Co. Ltd.UNKTAX[1980] 3 All E.R. 244; (1980) 53 T.C. 357

Cole Bros. Ltd. v. Phillips (H.M.I.T.) TAXTAX[1982] BTC 208; (1982) 55 T.C. 188

Cooke (H.M.I.T.) v. Beach Station Caravans Ltd. TAX(1974) 49 T.C. 514

Dixon (H.M.I.T.) v. Fitch's Garage Ltd. WLRTAX[1975] 1 W.L.R. 215; (1975) 50 T.C. 509

I.R. Commrs. v. Barclay, Curle & Co. Ltd. WLRTAX[1969] 1 W.L.R. 675; (1969) 45 T.C. 221

I.R. Commrs. v. Scottish & Newcastle Breweries Ltd. TAXTAX[1982] BTC 187; (1982) 55 T.C. 252

Jarrold (H.M.I.T.) v. John Good & Sons, Ltd. WLRTAX[1963] 1 W.L.R. 214; (1963) 40 T.C. 681

Schofield (H.M.I.T.) v. R. & H. Hall Ltd. TAX(1974) 49 T.C. 538

Capital allowances - First-year allowance - Plant or machinery - Tennis coaching business - Claim for allowance for inflatable cover for tennis courts refused - General Commissioners allowed appeal but case stated contained limited findings of fact - Whether on facts found Commissioners entitled to decide that cover was plant - Finance Act 1971 section 41Finance Act 1971, sec. 41.

This was an appeal by the Crown from a determination by General Commissioners that an inflatable cover used by the taxpayers in the course of their business as tennis coaches was "plant" for the purposes of claiming first-year allowance under Finance Act 1971 section 41sec. 41 of the Finance Act 1971.

The taxpayers carried on business in partnership as tennis coaches. In order to continue coaching during the winter months, they purchased an inflatable cover for the two tennis courts which they used in connection with the business. The Revenue refused a claim for first-year allowance under Finance Act 1971 section 41sec. 41 of the Finance Act 1971 on the grounds that the cover was not machinery or plant. General Commissioners allowed an appeal by the taxpayers against the refusal and the Crown appealed to the High Court. The Commissioners stated a case in which the only facts found were that the cover enabled coaching to continue during the winter months, that it protected the playing area from the weather, created warmer conditions on the tennis courts and increased the revenue which the firm could earn.

The Crown contended that on those facts, the cover merely provided shelter and did not perform any function in the carrying on of the business other than providing the setting in which it was carried on. The Crown submitted that authority showed that in those circumstances the cover could not be regarded as machinery or plant.

The taxpayers contended that, in addition to providing shelter, the cover diffused the light from exterior floodlights and created an atmosphere and lighting conditions very suitable for tennis coaching.

Held, allowing the Crown's appeal:

1. The facts as found by the Commissioners did not entitle them to conclude that the cover played a part in the running of the business beyond providing shelter. The inflatable cover therefore did not constitute plant for the purposes of claiming the allowance (Dixon (H.M.I.T.) v. Fitch's Garage Ltd. WLR[1975] 1 W.L.R. 215 followed.)

2. The additional matters of fact stated by the taxpayers tended to show that the cover had a function in relation to the business of coaching other than merely providing shelter. However, since the court was bound by the facts as found by the Commissioners, those matters could not be taken into account in reaching a decision.

CASE STATED

1. At a meeting of the Commissioners for the general purposes of the Income Tax Acts for the division of Scarsdale in the county of Derby, at Chesterfield, Derbyshire on 20 February 1985, Keith Stewart Reynolds and Ashley Frank Broomhead ("the taxpayers") trading as the Watchorn Tennis Club appealed against the following assessment to income tax under Sch. D, Case 1:

1982-83

Profits of tennis club

£6,119

Less capital allowances

£1,257

2. The question for the Commissioners' determination was whether expenditure incurred in the accounting year ended 31 March 1982 was incurred by the taxpayers on the provision of machinery or plant within the meaning of Finance Act 1971 section 41 section 44sec. 41 and 44 of the Finance Act 1971, so as to qualify for capital allowances.

  1. (2) Evidence was given by the taxpayer Keith Stewart Reynolds.

  2. (3) [Set out the documents proved or admitted before the Commissioners.]

4. The Commissioners found the following facts:

  1. (2) The taxpayers are qualified tennis coaches who carry on their business in partnership as professional tennis coaches at Ewart Lane, Alfreton, Derbyshire.

  2. (3) The taxpayers use two tennis courts in connection with their business and in order to continue coaching during the winter months purchased during the course of the year ended 31 March 1982 an inflatable cover of high grade polythene together with the necessary equipment to inflate the cover and a hut for storage when the cover was not in use.

  3. (4) The cover is in the nature of a balloon and is inflated by a 0.75k W air fan. The cover when inflated is held firmly to the ground by cables which are anchored to a concrete ring beam. The area covered by the cover when erected is 114 feet by 118 feet which covers the two tennis courts used for coaching. The cover when...

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1 cases
  • Gray v Seymours Garden Centre (Horticulture) (A Firm)
    • United Kingdom
    • Chancery Division
    • 1 April 1993
    ...v Barclay Curle & Co Ltd WLR[1969] 1 WLR 675.Schofield (HMIT) v R & H Hall Ltd TAX(1974) 49 TC 538.Thomas (HMIT) v Reynolds & Anor TAXTAX(1987) 59 TC 502; [1987] BTC 147.Hinton (HMIT) v Maden & Ireland Ltd TAX(1959) 38 TC 391.Cooke (HMIT) v Beach Station Caravans Ltd TAX(1974) 49 TC 514. 9.......

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