Cavities are not plant

The taxpayers’ businesses concerned the generation and supply of energy. They built underground cavities for the storage of gas from the national transmission system (NTS). The cavities allowed the removal of the gas to the NTS to enable its owners to profit from gas price volatility. They were created by a leaching process which involved drilling a borehole into salt rock into which water is pumped to dissolve the rock. The cavity is converted to gas storage by exchanging the resulting saltwater with gas through boreholes (debrining). The taxpayers claimed capital allowances on the expenditure incurred on leaching and debrining but the First-tier and Upper Tribunals dismissed their appeal.

The Court of Appeal said it could find no legal error in the Upper Tribunal’s decision. The taxpayers argued that the cavities were plant but the judge said there a ‘fundamental preliminary hurdle in the path’ of that argument. No...