Capital Allowance: Is Silo for Temporary Storage a Plant?

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R & H Hall Ltd

Northern Ireland
Court of Appeal (Northern Ireland)

27 November 1974

The Appellant Company (which was resident in the Republic of Ireland but had a branch in Northern Ireland) carried on the business of importers of grain for sale to millers and to manufacturers of animal feeding-stuffs.

The business was carried on at Cork, Belfast, Dublin and Waterford in the last century, and in the present century the operations in Cork, Belfast, Dublin and Waterford were considerably expanded.

So far as the Northern Ireland branch is concerned, there are between 20 and 30 millers in the Province who obtain their supplies of grain through the Company.

The method of conducting business is, briefly, as follows.

It purchased grain (which might be anywhere in the world when purchased) principally through London brokers.

The grain becomes the property of the Company when bills of lading are received.

Within one or two days the Company invoices the grain on to millers to meet orders; this is done in one of two ways, i.e.

  • big customers buy c.i.f. and the grain becomes their property when invoiced to them, which would normally be when it is in the ship’s hold before reaching Belfast; in such cases (which form the larger part of the business) the Company makes a charge to its customer for transfer from ship to customer’s lorries;
  • small customers buy the grain ex-silo, at a price which includes the cost of getting it from the silo into lorries.

The grain arrived at Belfast in shiploads of up to 20,000 tons.

It had formerly been bagged by hand, manhandled ashore and loaded by hand into customers’ lorries or into coasters; but being obliged to equip itself for bulk unloading owing to the increasing demand for grain for feeding-stuffs for battery-farmed hens and pigs, the Company in 1940 built a silo at the dockside.

After the war, it built another such silo jointly with another grain importer.

The silos were essentially transit silos; customers were expected to take delivery within seven days, and an additional charge was made in default.

The silos consisted, broadly, in a large concrete structure into which were built concrete bins, a small structure (“the workhouse”) which was in effect the lift shaft, and plant and machinery consisting of gantries, conveyor belts, mobile chutes, etc.

The grain was sucked up from the ship into the bins and from there released as required and permitted to descend by gravity, or by gravity assisted by machinery, into customers’ lorries.

The walls of the bins were either party walls with the next bin or the exterior walls of the silo.

On appeal against an assessment to corporation tax for the accounting period to 31st December 1969, the Company contended that the silos as a whole (and not only the machinery, etc. contained therein) qualified for capital allowances as plant used in carrying on its trade of grain importing.

For the Crown it was contended, inter alia, that the silos were part of the setting in which the trade was carried on, and were not plant but industrial buildings.

The Special Commissioners found that storage played only a trifling part in the Company’s trade of grain importing and that the silos served an essential part of the overall trade activity, their separate function being to hold grain in a position from which it could be conveniently discharged in varying quantities.

Applying the decision in Barclay, Curle & Co. Ltd. v. Commissioners of Inland Revenue, they held that the silos were plant for the purpose of capital allowances.

The Court of Appeal Held, that in relation to the Company’s trade the silos should be regarded as single units of plant and their external walls were not merely in the nature of a general setting in which a part of the operation was carried on, so that the Commissioners’ decision was justified.

In other circumstances a silo might be part of the premises or setting and not ‘plant’ in common law. It is necessary to come to a judgement on the facts of the case.
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