Underground storage 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. This 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 Tribunal dismissed their appeal.

The Upper Tribunal had to decide whether the cavities were plant. The taxpayers argued that an item is plant if it has any function as plant. The First-tier Tribunal conceded that the cavities did have a plant-like function in that they acted in an...