Industrial buildings allowances and temporary disuse

In 2004 the taxpayer bought some buildings that had fallen into disuse for the last 13 months. After a marketing campaign failed to attract tenants the taxpayer sold some of the buildings in 2006 and the rest in 2007. It claimed industrial buildings allowances on the basis that there was a period of ‘temporary disuse’ of the buildings beginning when the previous owner stopped using them and ending when the taxpayer disposed of them (CAA 2001 s 285).

The First-tier Tribunal agreed with HMRC that the buildings had fallen into disuse before the taxpayer bought them so no allowances were due. The taxpayer appealed.

The issue for the Upper Tribunal was whether the buildings were temporarily out of use so could be deemed to be industrial buildings. HMRC argued that temporary disuse had to be ‘book-ended’ by actual use at both ends of the disuse. Also...