Next Distribution Limited, Next Group Plc and The Paige Group Limited v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Richards |
| Neutral Citation | [2014] UKUT 0227 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,23 May 2014 |
| Date | 23 May 2014 |
| Published date | 01 December 2016 |
1
CORPORATION TAX – whether industrial buildings within s18 CAA – On facts – No –
appeal dismissed
[2014] UKUT 0227 (TCC)
FTC/94-96/2012
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
NEXT DISTRIBUTION LIMITED
NEXT GROUP PLC
THE PAIGE GROUP LIMITED Appellants
-and-
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE & CUSTOMS Respondents
TRIBUNAL: Mr JUSTICE DAVID RICHARDS
Sitting in public in London on 24-25 March 2014
Timothy Brennan QC, instructed by PricewaterhouseCoopers Legal LLP, for the
Appellants
Sam Grodzinski QC, instructed by the Solicitor to HM Revenue and Customs, for the
Respondents
Introduction
1. This appeal is concerned with the meaning of “industrial buildings” as defined in
section 18 of the Capital Allowances Act 1990 (CAA 1990).
2. The appellants are three companies in the Next group, which carries on clothing and
household goods retailing on a large scale both in shops and online. They appeal,
with permission granted by the First-tier Tribunal (FTT), against its decision that the
relevant premises were not “industrial buildings” for the purposes of section 18.
3. The premises in question (the Buildings) are two buildings, called Elmsall Way and
Stadium Two, near Doncaster. They were built in 1997-1999. The members of the
2
FTT (Judge Adrian Shipwright and Ruth Watts Davies FCIPD MIH) visited the
Buildings, which they describe in their Decision at [58] as “enormous”. Elmsall Way
has a capacity to hold approximately 16.5 million individual items and Stadium Two,
which primarily deals with items which are received hanging on rails rather than
folded in boxes, can store up to 4.25 million hanging items.
4. Next Group plc (NGP) is the freehold owner of the land on which the Buildings
stand. It granted a lease of the land to The Paige Group Limited (Paige) which in turn
granted a sub-lease to the first appellant, Next Distribution Limited (NDL), during the
course of construction. These companies are the appellants.
5. The warehousing and other activities at the Buildings, and at buildings elsewhere, are
carried on by NDL. It provides warehousing and distribution services to companies in
the Next group, mainly Next Retail Limited (NRL) which is the principal retailing
company in the group. These services have since 2007 also been provided to third
parties. It is common ground that NDL carried on the business of warehousing and
distribution services, not as part of a larger trade but as a separate trade. NDL does
not itself sell goods and, as the FTT found as a fact, its trade is the holding and
distribution of goods in a group context. The FTT accepted the following as an
accurate description of NDL’s business:
“dedicated warehouse processing, quality control, rework and sorting
services for goods acquired by NRL for resale in its business (principally
fashion clothing and homewares) and arranging for the storage of and then
the distribution of such goods to NRL stores, Directory customers and
franchisee customers…”
6. The total expenditure incurred by the appellants on the buildings was £19,264,856.
The amounts incurred by each of the appellants were as follows: NDL (£42,754),
NGP (£3,485,608) and Paige (£15,736,494). This expenditure covered land
preparation and the construction of walls and roofs for both warehouses, an office
block (costing less than 25% of the total building expenditure), car park and vehicle
access areas, as well as other building works which were not incidental to the
installation of plant and machinery. These figures are common ground.
To continue reading
Request your trial