The farmer had spent c. £300,000 on a potato store which, to a layman, appeared to be a commercial warehouse. The various structural elements within the store ensured the potatoes were maintained for a longer period than normal, enabling them to be sold at a much later date. The farmer claimed capital allowances on the basis the storage facility was plant as it carried out a specific function – to store potatoes and maintain the condition of the potatoes until needed with specialist cold storage facilities.

HMRC challenged the tax relief claimed by the farmer, arguing that the expenditure on the building for produce storage was that of a building, in which was stored the produce of the farmer’s trade.

However, this was rejected and it was successfully argued by the taxpayer that the store and all machinery within the store also functioned as part of the whole and was integral to maintaining the quality of the potatoes.

This is the second case in recent years which has significant implications for arable farmers. The first case involved a grain store, which was also deemed to be plant due to the nature of its purpose.

Whilst the above may be relevant to arable farmers, it is also important that livestock and dairy farmers give thought to the above when constructing new buildings. Although the whole build may not qualify as plant, certain elements from within most definitely will.