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HMRC internal manual

Capital Allowances Manual

HM Revenue & Customs
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IBA: Qualifying trade: Meaning of goods or materials

The courts considered the meaning of goods or materials in the cases of Buckingham v Securitas Properties Ltd. 53TC292 *and *Girobank plc v Clarke 70TC387.

There is no statutory definition of “materials” so you should give it its ordinary meaning.

Materials are not just raw materials. Materials that have been manufactured may be used in the manufacture of other products.

There is a statutory definition of goods in the Sale of Goods Act. It says”goods” includes all personal chattels other than things in action and money; and in particular “goods” includes emblements, industrial growing crops, and things attached to or forming part of the land, which are agreed to be severed before sale or under the contract of sale, and includes an undivided share in goods.

The Courts have quoted this definition with approval. In both Securitas Properties and Girobank it was held that goods meant merchandise or wares and that is the line you should take.

Securitas Properties owned a building in which they stored coins and notes and made up wage packets. They claimed IBA on the grounds that making up wage packets was the subjection of goods or materials to a process. Their IBA claim was refused on the grounds that the coins and notes were held as currency and so were not goods or materials.

This does not mean that coins cannot be goods or materials. Coins held as trading stock by a jeweller who incorporates them into jewellery that is made are goods or materials. 

Girobank claimed industrial buildings allowances on a building that was used for processing cheques and other documents, such as credit card slips. In the processing information was extracted from the cheques and other documents. The IBA claim was refused on the grounds that the cheques and other documents were not merchandise or wares and so were not goods or materials.

Most chattels are goods or materials but the phrase does not include:

  • land,
  • coins or notes used as currency (Buckingham v Securitas Properties Ltd. 53TC292),
  • cheques (Girobank plc v Clarke 70TC387),
  • documents (Girobank plc v Clarke 70TC387),
  • human remains (Bourne v Norwich Crematorium Ltd. 44TC164). The company claimed IBA on its crematorium buildings on the grounds that they were used for subjecting goods or materials to a process. The IBA claim was refused because it was held that human remains are not goods or materials,
  • dogs and cats (Carr v Sayer 65TC15). In Carr v Sayer IBA was claimed on quarantine kennels on the grounds that they were used to store goods on their arrival in the UK from a place outside the UK. The Commissioners held that dogs and cats were not goods and so no IBA was due.

Other animals may be goods. Accept that rodents bred for experimental purposes are capable of being goods where the objective is to produce animals of a standard weight and size that meet other pre-determined criteria such as being germ-free and so are saleable products.