Gas reception and processing plant — Turbines and compressors — General Rate Act 1967 — Plant and Machinery (Rating) Order 1960 — Whether turbines rateable — Appeal by valuation officer allowed
The respondent occupies a gas reception and processing plant at Paston Road, Bacton, Norfolk. The hereditament receives sweet and sour gas by separate pipes from the Hewett natural gas field in the North Sea. Pollutants are removed from the sour gas which then, together with the sweet gas, is compressed to a pressure such that it can be received by British Gas. Condensates accumulate in the undersea pipelines and these are removed by passing a sphere called a pig through the pipes; the condensates are removed by a slug catcher.
By 1980 12 gas compression packages were installed on the site each consisting of a compressor and gas turbine or reciprocating gas-fuelled engine; these units increase the pressure of the gas for operating purposes. The appellant valuation officer accepted that the compressors are not rateable but contended that the turbines that generate and supply power to the compressors are rateable.
Schedule 3 to the General Rate Act 1967 provides that plant and machinery in Class 1 to that schedule are to be regarded as part of the hereditament. The schedule to the Plant and Machinery (Rating) Order 1960 divides Class 1 into two groups: Class 1A refers to machinery and plant “… used or intended to be used mainly or exclusively in connection with the generation, storage, primary transformation or main transmission of power in or on the hereditament”. On behalf of the respondent, it was submitted that plant and machinery are not rateable under Class 1A to the schedule to the 1960 Order unless used or intended to be used mainly or exclusively as so defined. The disputed items of machinery do not satisfy this requirement because the generation and storage of power referred to in Class 1A is a reference to the main power provided for the hereditament which is made available to be tapped into by different machines.
As the hereditament had a main source of power, namely a supply of electricity, the disputed machines were not providing the main source of power but were supplying individual sources of power to machines engaged in a trade process.
Held The appeal was allowed.
In Class 1A the words “the generation” are not qualified in any way. The gas turbines are used and intended to be used exclusively in connection with the generation of power in or on the hereditament; they therefore fall within Class 1A and are rateable. The alternative submission, that it was wrong to treat the disputed turbines as separable from their compressors, could not be accepted. All the disputed items were capable of being separated from their compressors and of being used to provide power to other machines.
David Woolley QC (instructed by the Solicitor of Inland Revenue) appeared for the appellant and called Bernard Ediss ARTCS, CEng, FInstME; Matthew Horton QC (instructed by McKenna & Co) appeared for the respondent and called Michael Mobbs BSc.
