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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> HMRC v SSE Generation Ltd [2021] EWCA Civ 105 (01 February 2021) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2021/105.html Cite as: [2021] BTC 6, [2021] STC 369, [2021] STI 690, [2021] EWCA Civ 105 |
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ON APPEAL FROM THE UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
(Judge Herrington and Judge Brannan)
[2019] UKUT 332 (TCC)
Strand, London, WC2A 2LL |
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B e f o r e :
LADY JUSTICE ROSE
and
LORD JUSTICE POPPLEWELL
____________________
THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS |
Appellants |
|
- and – |
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SSE GENERATION LIMITED |
Respondent |
____________________
Jonathan Peacock QC and Michael Ripley for the Respondent
Hearing dates: 8 and 9 December 2020
____________________
Crown Copyright ©
Lady Justice Rose:
1. Introduction and outline of the issues
2. The items of plant in dispute
3. The legislation in more detail
"11 General conditions as to availability of plant and machinery allowances
(1) Allowances are available under this Part if a person carries on a qualifying activity and incurs qualifying expenditure.
(2) "Qualifying activity" has the meaning given by Chapter 2.
(3) Allowances under this Part must be calculated separately for each qualifying activity which a person carries on.
(4) The general rule is that expenditure is qualifying expenditure if –
(a) it is capital expenditure on the provision of plant or machinery wholly or partly for the purposes of the qualifying activity carried on by the person incurring the expenditure, and
(b) the person incurring the expenditure owns the plant or machinery as a result of incurring it.
(5) But the general rule is affected by other provisions of this Act, and in particular by Chapter 3."
"21 Buildings
(1) For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on the provision of a building.
(2) The provision of a building includes its construction or acquisition.
(3) In this section, 'building' includes an asset which –
(a) is incorporated in the building,
(b) although not incorporated in the building (whether because the asset is moveable or for any other reason), is in the building and is of a kind normally incorporated in a building, or
(c) is in, or connected with the building and is in list A.
List A
Assets treated as buildings
1. Walls, floors, ceilings, doors, gates, shutters, windows and stairs.
2. Mains services, and systems, for water, electricity and gas.
3. Waste disposal systems.
4. Sewerage and drainage systems.
5. Shafts or other structures in which lifts, hoists, escalators and moving walkways are installed.
6. Fire safety systems."
"22 Structures, assets and works
(1) For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on –
(a) the provision of a structure or other asset in list B, or
(b) any works involving the alteration of land.
List B
Excluded structures and other assets
1. A tunnel, bridge, viaduct, aqueduct, embankment or cutting.
2. A way, hard standing (such as a pavement), road, railway, tramway, a park for vehicles or containers, or an airstrip or runway.
3. An inland navigation, including a canal or basin or a navigable river.
4. A dam, reservoir or barrage, including any sluices, gates, generators and other equipment associated with the dam, reservoir or barrage.
5. A dock, harbour, wharf, pier, marina or jetty or any other structure in or at which vessels may be kept, or merchandise or passengers may be shipped or unshipped.
6. A dike, sea wall, weir or drainage ditch.
7. Any structure not within items 1 to 6 other than –
(a) a structure (but not a building) within Chapter 2 of Part 3 (meaning of 'industrial building'),
(b) a structure in use for the purposes of an undertaking for the extraction, production, processing or distribution of gas, and
(c) a structure in use for the purposes of a trade which consists in the provision of telecommunication, television or radio services.
(2) The provision of a structure or other asset includes its construction or acquisition.
(3) In this section –
(a) 'structure' means a fixed structure of any kind, other than a building (as defined by section 21(3)), and
(b) 'land' does not include buildings or other structures, but otherwise has the meaning given in Schedule 1 to the Interpretation Act 1978."
"(3) Sections 21 and 22 also do not affect the question whether expenditure on any item described in list C is, for the purposes of this Act, expenditure on the provision of plant or machinery."
"22. The alteration of land for the purpose only of installing plant or machinery.
…
25. The provision of pipelines or underground ducts or tunnels with a primary purpose of carrying utility conduits."
4. The relationship between section 22(1)(a) and section 22(1)(b)
"Parliament must have known that the term "provision" when used in relation to a structure did, because of the way the term had been interpreted in case law, include any alterations of land which were necessary for the construction of the structure in question and because Parliament must have intended to ensure that the specific exceptions it provided in Item 7 in List B were effective. That intention would be thwarted were the structure in question to be excluded on the basis that its construction entailed works which involved the alteration of land."
Discussion
5. The meaning of 'tunnel' in List B Item 1
"the assumption being that structures and assets which are specifically grouped together are likely to share some basic common theme and should be interpreted in accordance with that theme unless none can in fact be found."
"I would add that in common parlance, the word "tunnel" would normally refer to a passage bored through ground which permits people or forms of transport to pass to and fro. "Embankment" is defined in the OED as "a mound, bank, or other structure for confining a river, etc. within fixed limits" or, more familiarly, as "a long earthen bank or mound, esp. one raised for the purpose of carrying a road or a railway across a valley.". "Cutting" is relevantly defined as "an open, trench-like excavation through a piece of ground that rises above the level of a canal, railway, or road which has to be taken across it". On this basis, there does seem to be a clear theme emerging in Item 1 of structures related to transportation infrastructure."
" … in our view the words immediately surrounding "tunnel" in Item 1 of List B are "bridge, viaduct, aqueduct, embankment or cutting" all of which are the product of civil engineering works related to the construction of transportation ways and routes, that is the types of ways and routes which the draftsman subsequently lists in Item 2 and 3 of List B. It follows therefore that the context requires that the word "tunnel" should be given a narrower meaning than its ordinary dictionary meaning."
Discussion
6. The meaning of 'aqueduct' in List B Item 1
"the better view to be that in the context of List B, the word "aqueduct" is apt to describe an asset of the type we are here concerned with – an artificial underground conduit whose function is solely to transport water from one place to another through the ground under the force of gravity; I consider the transportation of water itself is enough to be consistent with the overall "transportation" theme of Item 1, rather than requiring the water to be the means of transportation of other things (as in the case of a canal)."
Discussion
7. The application of the provisions to the disputed plant
"85. It follows that no allowances are available for the expenditure on the fabrication in situ of the concrete conduit itself (excluded as an "aqueduct" by Item 1 in List B), but the expenditure incurred on the preparatory excavations and the subsequent re-covering of the conduit after it had been built is allowable. Whilst it might appear a somewhat counter-intuitive result that the method of construction should make a difference to the CAA treatment in this way, intuition is rarely a reliable guide to statutory interpretation, and the difference in treatment flows logically, in my view, from the terms of the legislation."
Discussion
"The meaning of a word or phrase in an Act of Parliament is a question of law not fact; even though the law may then declare that the word or phrase has no statutory meaning beyond its common acceptance and that it is a question of fact whether the circumstances fall within such meaning (Cozens v Brutus). But many words and phrases in English have many shades of meaning and are capable of embracing a great diversity of circumstance. So the interpretation of the language of an Act of Parliament often involves declaring that certain conduct must as a matter of law fall within the statutory language (as was the actual decision in Edwards v Bairstow); that other conduct must as a matter of law fall outside the statutory language; but that whether yet a third category of conduct falls within the statutory language or outside it depends on the evaluation of such conduct by the tribunal of fact. This last question is often appropriately described as one of 'fact and degree'."
"145. Although the FTT did not say so in terms, in our view it is implicit in the Decision that the FTT proceeded on the basis that it had found that all the assets in dispute were "structures": see [43] of the Decision where the FTT referred to it being common ground that none of the "structures" involved in this case fall into List B by virtue of Item 7 because of the exception for industrial buildings referred to below. Alternatively, in so far as it is necessary to make an express finding of fact to that effect, we do so by the exercise of our powers under s 12(4)(b) TCEA on the basis of the evidence that we were shown as to the features of the various assets and their method of construction."
8. The effect of SSE's Respondent's notice
"In circumstances where a respondent is opposing an appeal but wishes to challenge a finding of the FTT on a point which it argued before the FTT but in respect of which it was unsuccessful, it can do so simply through the medium of the Respondent's Notice which it may (but need not) file pursuant to Rule 24 of The Tribunal Procedure (Upper Tribunal) Procedure Rules 2008. If a Respondent's Notice is filed, then Rule 24 (3) (f) requires the Respondent to set out the grounds on which the Respondent relies in the Upper Tribunal proceedings, which the rule states are to include "any grounds on which the respondent was unsuccessful in the proceedings which are the subject of the appeal, but intends to rely in the appeal". SSEG clearly met the requirements of that rule in its Respondent's Notice, specifying a number of arguments which it ran before the FTT and which it wished to argue again. In our view, there is nothing in the rule that indicates that the rule is limited to arguments which simply seek to uphold the FTT's decision on different grounds. Therefore, provided the argument was one that was before the FTT it is open to a respondent to argue the point again in the Upper Tribunal provided it gives notice of that in its respondent's notice without needing to apply for permission to appeal."
"11 Right to appeal to Upper Tribunal
(1) For the purposes of subsection (2), the reference to a right of appeal is to a right to appeal to the Upper Tribunal on any point of law arising from a decision made by the First-tier Tribunal other than an excluded decision.
(2) Any party to a case has a right of appeal, subject to subsection (8).
(3) That right may be exercised only with permission (…)
(4) Permission … may be given by
(a) the First-tier Tribunal, or
(b) the Upper Tribunal,
on the application by the party."
"24(3) (f) the grounds on which the respondent relies, including (in the case of an appeal against the decision of another tribunal) any grounds on which the respondent was unsuccessful in the proceedings which are the subject of the appeal, but intends to rely in the appeal;"
9. Conclusion
Lord Justice Popplewell:
Lord Justice David Richards: