This was the question argued by Mr Stephen May when his claim for capital allowances on the whole construction cost of a grain “facility” was rejected by HMRC.
In 2011, Mr May commissioned the construction of a structure to be used for the drying and conditioning of grain harvested on his farm and for the temporary storage of the grain until it is sold.
The structure is a steel framed barn with a power floated concrete floor, concrete panels form the sides of the structure with a permanent concrete barrier running down the middle of the barn and a movable barrier for further separation of different grain types.
The barn is equipped with an air inlet on one side of the barn and an extractor fan on the opposite side together with movable floor standing pedestals set at intervals in the store equipped with extractor fans on top of each. This setup enables drier air from outside the barn to be drawn through the grain into the pedestals extracting moisture from the grain which is then expelled via the fan units on the pedestals and the extractor fan on the side of the structure.
HMRC challenged that capital allowances could not be claimed on the structure, but only on the plant and machinery within it. Mr May appealed the decision and the case was then heard in November 2018 by the First Tier Tribunal (FTT) which found in favour of Mr May. The FTT specified that the design of the building with a low roof of specific pitch, thicker than normal walls and the power floated concrete floor were all necessary parts of the grain drying and conditioning process without which the operation would be ineffective. The FTT further specified that due to the specific nature of the facility, it could not be used for other purposes.
This case has the potential to have far reaching implications in respect of capital allowances claims on the construction of not only grain facilities, but also those used for the moisture and temperature regulation and temporary storage of other crops.