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HMRC internal manual

Capital Allowances Manual

IBA: Qualifying trade: Meaning of office

You decide whether a building is an office by looking at the activities carried out in it. A building or part of a building that is directly involved in a manufacturing operation or the subjection of goods to a process will not normally be an office. A building occupied by managerial staff or concerned with marketing or administration will be.

In the case of Girobank plc v Clarke 70TC387 *Nourse L J said that”office, like so many words in our language, is one whose signification varies according to the context in which it is used. It is easier to recognise one than to define what it is*.” He gave examples where the term “office” is used to describe the entirety of the premises such as a solicitor’s or accountant’s office and examples where it is used to describe part only of the premises. In the case of *Girobankplc v Clarke *the Revenue claimed that the bank’s processing centre was an office but the Special Commissioner and the Court of Appeal rejected the claim. The Commissioner found as a fact that the building functioned as a modern light industrial building and the Court of Appeal held that there were no grounds for overturning the Commissioner’s finding of fact. No significant managerial functions were performed in the building.

A building that is called an office may not be an office for the purposes of the IBA legislation. For example, a drawing office attached to a factory may not be an office for IBA purposes, (CIR v Lambhill Ironworks Ltd. 31TC393). Lambhill Ironworks were structural engineers. Their drawing office was held to be an industrial building and not an office or ancillary to an office. A distinction was made between the managerial and industrial sides of the business and the drawing office was used for the industrial side.

A drawing office in a manufacturing business will qualify for IBA if it is used predominantly for making drawings for the purpose of capital development, the maintenance of existing plant or manufacturing contracts placed with and to be executed by the business.

Buildings which house staff engaged in time and motion study in a factory, progress chasing, factory layout and management, costing, training of factory staff, factory fire precautions etc. are not offices for the purposes of the IBA legislation.

Accommodation for the editorial staff of a newspaper is not normally an office. Their activities will form an integral part of the production of the newspaper.

Examples of buildings that are offices for IBA purposes and so do not qualify for IBA are accommodation for:

  • the board and senior executives,
  • planning and administration,
  • personnel,
  • works planning and control,
  • works manager and staff dealing with costing and despatch, and
  • buildings which house wages offices and purchasing and sales departments.