Expenditure on haulage equipment was not deductible under CTA 2009, s 68

In its corporation tax computations for the years ending 31 December 2009 2010 and 2013 the taxpayer deducted expenditure incurred on the replacement of tractor units and trailers used in its haulage trade. It claimed the deductions were allowable under CTA 2009 s 68 (formerly TA 1988 s 74(1)(d)). It had also in its computation for the year ended 31 December 2008 claimed capital allowances for the cost of replacing equipment. In 2011 it made a mistake claim disclaiming the capital allowances but claiming a deduction under TA 1988 s 74(1)(d).

HMRC refused the claim and the taxpayer appealed.

On whether s 74(1)(d) authorised deduction of costs of replacement items the First-tier Tribunal found it did not. Rather and referring to Brown v Burnley Football and Athletic Co Ltd [1980] STC 45 it ‘operated negatively to limit deduction rather than to provide...