Commercial arrangement

A syndicate funded the construction and fitting-out of a laundry in the Lanarkshire enterprise zone at Wishaw. The Lanarkshire Primary Care NHS Trust had procured the building and the facility was to be used by local NHS hospitals.

The taxpayer was an investor in the syndicate. He claimed an initial industrial buildings allowance of 100% under CAA 2001 s 305 contending that the property was commercial within s 271(1)(b)(iv).

HMRC refused on the ground the laundry did not have a commercial use. The taxpayer appealed.

The First-tier Tribunal (FTT) decided the laundry activity in the building constituted a trade and the building was commercial.

HMRC appealed saying the FTT erred in law by finding the building was used for the purposes of a trade.

The Upper Tribunal judge said the FTT was entitled to conclude that the arrangements were at arm’s length between the Lanarkshire...