HMRC internal manual

Capital Allowances Manual

CA32311 - IBA: Qualifying trade: Meaning of retail shop

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The meaning of retail shop was considered in the case of Kilmarnock Equitable Co-operative Society Ltd. v CIR 42TC675. Kilmarnock’s business included selling coal in paper bags, both retail and wholesale. It constructed a building in which it screened and packed the coal and claimed IBA on the grounds that goods were subjected to a process in it. The company’s claim succeeded. In that case Lord Cameron said the purposes of a retail shop are to enable the public to resort to a place where they may see and purchase goods or materials by retail and to serve as a place of exhibition and sale of a shopkeeper’s wares.

The meaning of shop was also considered in various rating cases. Those cases established that premises to which the public has access for the purposes of having wants supplied or particular services rendered are shops. This means that a building does not have to be premises where goods are sold over the counter to be a shop. For example, buildings occupied by laundrettes, banks, undertakers, jobbing builders and shoe repairers are shops. Trade customers are not the public and so a building that serves only trade customers is not a retail shop. A wholesaler’s premises are not a retail shop if all the customers are trade customers. If, however, the public are allowed to shop at a wholesaler’s premises it will be a retail shop even if most of the customers are trade customers.