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HMRC internal manual

Capital Allowances Manual

HM Revenue & Customs
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IBA: Qualifying trade: Part trades

CAA01/S276 (1) - (2)

The IBA legislation applies to a part of a trade as it applies to a trade. However, where only part of a trade is a qualifying trade a building is in qualifying use, and so qualifies for IBA, if and only if it is in use for the purposes of the part of the trade that is a qualifying trade.
A part of a trade does not need to be a self-contained part. It should, however, be asignificant, separate and identifiable part of the trade carried on. The expression”part of a trade” does not mean any activity undertaken in the course of a trade, (Bestway (Holdings) Ltd. v Luff 70TC512). In that case the company claimed that the activities of checking and sorting goods, unpacking goods, repacking goods, labelling goods and reading product bar codes carried on in cash and carry warehouses were a part trade of subjection of goods to a process. The claim was refused because those activities were mere preliminaries to the trade of selling the goods wholesale and was not so significant to be “a part of a trade”.

A trade that consists of the purchase, storage and sale of goods can include a part trade of storage (Crusabridge Investments Ltd. v Casings International Ltd. 54TC246). Casings leased a building from Crusabridge. The terms of the lease required Casings to use it as a warehouse that was an industrial building for IBA purposes. Casings bought used tyre casings, examined and regraded them and then sold them to people who would remould them. It sold remoulds on a commission basis. Crusabridge’s IBA claim was refused and so it sued Casings for damages. The Revenue was not a party to the case. Crusabridge lost the case because the court held that the storage of remoulded tyres and the storage of used casings were qualifying part trades of storage and so the building should qualify for IBA. Finlay J held that it did not matter that the trade in which goods had been or would be subjected to a process was not the trade of the storer.