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HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
Updated
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IBA: Qualifying trade: Mixed use

A building may be in use at the same time for the purposes of a qualifying trade and for other purposes and all parts of the building may be used for both. For example, a building may be used to store goods that have been manufactured and not delivered to any purchaser and goods which have been bought for resale. The storage of goods that have been manufactured and not delivered to any purchaser is a qualifying trade while the storage of goods that have been bought for resale is not a qualifying trade.

Where:

  • a building is sometimes used for the purposes of a qualifying trade and sometimes used for other purposes, and
  • the whole building is used for both purposes, and
  • none of the uses of the building are excepted uses CA32310,

give IBA on the whole building if the use for qualifying purposes is not negligible; that is if the qualifying use is 10% or more of the total use of the building, (Saxone, Lilley and Skinner (Holdings) Ltd. v CIR 44TC122). A member of the Saxone, Lilley and Skinner group used a warehouse for the central storage of shoes sold retail by the group. About one-third of the shoes had been manufactured by a member of the group and not delivered to any purchaser and the rest had been purchased from other manufacturers. In the House of Lords the warehouse was held to be an industrial building on the grounds that the building was used to store goods that had been manufactured and not delivered to any purchaser. No identifiable part of the building was used to store those goods and so the whole building was used to store them.