Wellstead v Revenue and Customs (INCOME TAX/CORPORATION TAX : Capital allowances) [2016] UKFTT 492 (TC) (13 July 2016)

Wellstead v Revenue and Customs (INCOME TAX/CORPORATION TAX : Capital allowances) [2016] UKFTT 492 (TC) (13 July 2016)

On a purposive construction of the relevant statutory provisions, the grant of a long underlease by HCL to Mr Wellstead, which transferred all valuable rights in Unit 2 and left HCL with only a nominal reversion, constituted the sale of a relevant interest for the purposes of industrial buildings allowances. The statutory scheme does not preclude such treatment, and there is no policy reason to deny relief in these circumstances.

Citation
[2016] UKFTT 492 (TC)
Parties
Appellant: David Wellstead; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
13 July 2016
Procedural Posture
Income Tax Appeal (capital Allowances) / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal allowed
Legal Topics
Capital Allowances, Industrial Buildings Allowances, Statutory Construction, Enterprise Zones
Tax Law Capital Allowances Industrial Buildings Allowances Statutory Construction Enterprise Zones

Case Brief

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Parties

David Wellstead

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax Appeal (capital Allowances) / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether the grant of a long underlease by a developer to a purchaser constitutes the sale of a 'relevant interest' for the purposes of entitlement to industrial buildings allowances under ss286-296 Capital Allowances Act 2001.

Ratio Decidendi

On a purposive construction of the relevant statutory provisions, the grant of a long underlease by HCL to Mr Wellstead, which transferred all valuable rights in Unit 2 and left HCL with only a nominal reversion, constituted the sale of a relevant interest for the purposes of industrial buildings allowances. The statutory scheme does not preclude such treatment, and there is no policy reason to deny relief in these circumstances.

Court Disposition

Appeal allowed

Orders

  • Mr Wellstead is entitled to claim industrial buildings allowances on the purchase price paid for the underlease of Unit 2.