Capital allowances — Industrial building — Property used as paper processing centre — Special commissioner holding that property not “industrial building or structure” — Property not eligible for capital allowances — Appeal to High Court dismissed
Girobank’s premises at Quayside, Westwood Park, Wigan, Lancashire (“the Wigan Centre”), consisted of a single-storey building of modular construction with few internal pillars or columns suitable for flexible open plan use. It contained 64,500 sq ft of operational processing space. It was designed specifically to meet the operational requirements of Girobank’s paper processing, but also to provide accommodation of a type and standard that would satisfy other users’ requirements should Girobank cease to use it for that purpose. It looked like a modern light industrial building.
The question in issue was whether the Wigan Centre qualified as an “industrial building or structure” for the purposes of section 18 of the Capital Allowances Act 1990. Section 18(1) provided that: “`industrial building or structure’ means a building or structure in use: (a) for the purposes of a trade carried on in a mill, factory or other similar premises; or…(e) for the purposes of a trade which consists in the manufacture of goods or materials or the subjection of goods or materials to any process:…”. Section 18(4) provided that the definition did not include “…any building or structure in use as, or as part of, a dwelling house, retail shop, showroom, hotel or office…”. It was not in issue that Girobank carried on a trade and/or that the Wigan Centre was used for the purposes of that trade. The deputy special commissioner held that the Wigan Centre was not an industrial building eligible for capital allowances. Girobank — acquired by the Alliance & Leicester Building Society some years ago — appealed to the High Court.
Held The appeal was dismissed.
1. The words “any process” in section 18(1)(e) were not limited to processes only of an “industrial” character. Nor was it required of a process that it altered the goods and materials subject to it in any way, but rather it might suffice that the process should clean, sort or package the goods or materials fed into it. Further, it was no requirement of a process that it should be done with a view to the sale or disposition of the goods or materials processed. In all the circumstances section 18(1)(e) was satisfied.
2. However, there was ample material to support a finding that the Wigan Centre was an “office” within section 18(4). The machines at the centre, under the guidance of the operators, performed functions which would in the past have been performed manually by clerks working in their offices and all the machines in operation could be found in many buildings regarded as offices.
3. Given that nowadays offices were likely to include telephones, photocopiers, fax machines, electronic calculators, visual display units, computers, etc, it could not be said that offices were “for people not for machines”.
4. Further the centre was not a “mill” within section 18(1)(a). Mills were premises at which, chiefly by way of use of machinery, one or more processes which required the use of that machine were applied substantially to alter the physical nature of the materials to which they were applied, and with a view to that alteration making that material suitable for commercial use or disposition as merchandise or wares.
Peter Whiteman QC (instructed by the solicitor to the Alliance & Leicester Building Society) appeared for Girobank; Timothy Brennan (instructed by the solicitor of Inland Revenue) appeared for the Crown.