House of Lords

Published September 2, 2008

Maco Door and Window Hardware (UK) Ltd v Revenue and Customs Commissioners

Before Lord Hoffmann, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Mance and Lord Neuberger of Abbotsbury

Speeches July 30, 2008

Expenditure on a warehouse which was used for storage of goods which the taxpayer was in the business of importing and selling was not expenditure on an industrial building so as to qualify under section 18 of the Capital Allowances Act 1990.

The House of Lords so held (Lord Scott and Lord Mance dissenting) allowing an appeal by the Revenue and Customs Commissioners from the Court of Appeal (Lord Justice Carnwath, and Lady Justice Hallett, Lord Justice Lawrence Collins dissenting) ([2007] Bus LR 1686) which allowed an appeal by the taxpayer, Maco Door and Window Hardware (UK) Ltd from Mr Justice Patten (The Times August 11, 2006; [2007] STC 721) who allowed the commissioners’ appeal from a special commissioner, Dr John F. Avery Jones, who on October 25, 2005 allowing the taxpayer’s appeal from the commissioners’ decision that expenditure on the taxpayer’s warehouse building at Eurolink Business Centre, Sittingbourne, Kent, did not qualify as expenditure on an industrial building for the purposes of section 18 of the 1990 Act.

Mr Timothy Brennan QC and Mr Akash Nawbatt for the commissioners; Mr Giles Goodfellow, QC and Mr James Rivett for the taxpayer.

LORD WALKER said that the issue turned on the definition of “industrial building or structure” and, in particular, on the meaning of “part of a trade” in section 18(2).

The taxpayer traded as an importer and distributor of products manufactured by its Austrian parent company.

The products were hardware such as locks, handles and hinges, to be fitted to a wide range of doors and windows produced by other manufacturers. Designs of the hardware changed frequently to keep up with changes in the designs of doors and windows.

The taxpayer purchased its stock from its parent company and sold it, either to wholesale distributors or direct to manufacturers of doors and windows, as a principal, not as an agent.

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