Construction — Provision of leisure facilities — Football pitches — Synthetic grass “carpet” — Whether capital expenditure on excavation, infilling, drainage and synthetic grass amounting to expenditure on provision of plant and machinery for capital allowance purposes — Appeal dismissed
The respondent provided leisure facilities, including synthetic football pitches, which generated 70% of its turnover. It claimed capital allowances on capital expenditure incurred in the construction of a number of five-a-side football pitches. The appellant refused to grant the respondent’s claim for writing down allowances in respect of investigative and excavation works, infilling, drainage, geotextile material and sand-filled synthetic grass “carpets”. The respondent appealed that decision.
Schedule AA1 of the Capital Allowance Act 1990 excluded from allowances on plant and machinery expenditure on structures, assets and works listed in col 1 of Table 2. Paragraph 5 of the Scedule defined “structure” as a “fixed structure of any kind, other than a building”.
The respondent contended that its claim was for the carpet, which was neither fixed nor a structure and therefore not affected by Table 2. The expenditure on the site described as “excavation works” and “pitch build-up” was covered by item 1 of col 2 of Table 2, and so was unaffected by Schedule AA1. The appellant argued that the pitch had to be considered as a whole, and not artificially dissected so that it was excluded from being plant by item G in column 1 as structure. A special commissioner decided that the respondent was entitled to the capital allowances claimed: see [2003] STC (SCD) 115. The appellant appealed to the Court of Session.
Held: The appeal was dismissed.
It was open to the special commissioner to conclude that the carpet was the relevant item, that it had a separate identity from the works that had been performed underneath it and that it was not fixed to those works. The decision of the special commissioner had not been shown to have been inconsistent with the facts or lacking evidence to support it. The carpet by itself could not be regarded as a structure and, accordingly, the expenditure on the carpet was not excluded by item G in Table 2 of Schedule AA1.
The pitch, if looked at as a whole, or the carpet could be regarded as both the setting and the means by which the business was carried on. In one sense, the trade was the provision of the setting, but in another, the carpet was the plant with which the trade was carried on. Once the plant was used in the trade, it did not matter that it was also the setting. On the established facts, the commissioner had reached the correct conclusion on this issue and had not erred in law.
Considering the function performed by the carpet in the respondents’ trade, it constituted plant with which the trade was carried on. It was not merely a part of the premises, but the means whereby the operation of providing synthetic five-a-side football pitches was carried out: Shove (HMIT) v Lingfield Park (1991) Ltd [2003] EWHC 1684 (Ch); [2003] PLSCS 178 distinguished.
Patrick Hodge QC and Jane Paterson (instructed by the solicitor to the Inland Revenue) appeared for the appellant; Julian Ghosh (instructed by Dundas & Wilson, of Glasgow) appeared for the respondent.
Eileen O’Grady, barrister