Able (UK) Ltd. v Revenue & Customs

Able (UK) Ltd. v Revenue & Customs

Compensation paid to Able (UK) Ltd was for temporary loss of use of its landfill site, not for exhaustion or destruction of a profit-earning source. The inability to exploit the site for general waste after the interruption was due to market changes, not to permanent impairment of the asset. Therefore, the compensation is an income receipt for tax purposes.

Parties
Appellant: Able (UK) Ltd; Respondent: HM Revenue & Customs
Jurisdiction
England and Wales
Judgment Date
22 November 2007
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Capital Vs Income Receipts, Compulsory Purchase Compensation, Land Compensation Act 1961
Tax Law Capital Vs Income Receipts Compulsory Purchase Compensation Land Compensation Act 1961

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Parties

Able (UK) Ltd

Appellant

HM Revenue & Customs

Respondent

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether compensation paid to Able (UK) Ltd for temporary loss of use of landfill site is capital or income for tax purposes

Ratio Decidendi

Compensation paid to Able (UK) Ltd was for temporary loss of use of its landfill site, not for exhaustion or destruction of a profit-earning source. The inability to exploit the site for general waste after the interruption was due to market changes, not to permanent impairment of the asset. Therefore, the compensation is an income receipt for tax purposes.

Court Disposition

Appeal dismissed

Orders

  • Compensation to be treated as income for tax purposes
  • No error of law in the General Commissioners’ or High Court’s approach