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Capital Allowances Case - Personal Security Assets

Capital Allowances Tax Case Review

Fencing Did Not Qualify For Capital Allowances

Brockhouse (Mr PD, Mrs J & LD) V HMRC Commissioners [2011] UKFTT 380 (TC)

Tribunal Release Date: 9th June 2011


The taxpayers were unsuccessful in claiming plant and machinery capital allowances for fencing, as expenditure on ‘personal security’ assets.


The taxpayers’ business sold fish, aquariums, ponds and associated products.  Part of their site comprised a field with a storage lake.  In their tax year ended April 2007 they spent about £81,000 on over 2,000 metres of galvanised palisade fencing around the field perimeter.  The area was previously fenced by an insecure timber fence with barbed wire along the top that was already in disrepair when the land was bought in 1991.


The taxpayers’ had tried to argue that the expenditure was on tax-deductible repairs, or was ‘plant’ under basic capital allowances principles.  But they had abandoned those arguments.


Instead, they claimed that the fence was plant because it had been installed to improve security.  They said that Mr Brockhouse had felt threatened and vulnerable to attacks.  He had suffered vandalism and poaching and had had confrontations with poachers (that had resulted in him receiving a suspended prison sentence for carrying a loaded shotgun in public and assault).  The stock lake was remotely located, which meant access was restricted and personal protection was offered to those tending the stocks.  The taxpayers’ home was also close by.  They argued that although intruders were attracted by the valuable fish in the lake, the lake was netted, so theft was difficult, and the risk of property loss was low.  Injury to Mr Brockhouse was said to be the main concern.


The taxpayers were represented by their accountant.  However, unfortunately he had not been provided with all of the necessary factual detail about exactly what had happened and when (especially whether any incidents in the past had been targeted against the business or Mr Brockhouse personally).

Relevant Law/ Practice

Fundamentally, ‘plant’ is defined by case law as business ‘apparatus’ (Yarmouth v France (1887) LR 19 QBD 647).  However, in the right circumstances the Capital Allowances Act 2001 (‘CAA 2001’) specifically designates expenditure on some kinds of assets to be plant.  Broadly, CAA 2001 section 33 applies where money is spent for business purposes by an individual or partnership of individuals (not a company) on security assets solely to meet a ‘special threat’ to an individual’s personal physical security that has arisen because of the business.


HM Revenue & Customs (‘HMRC’) accepted that the taxpayers’ met most of the relevant conditions (ie, they had the right type of business and had bought a security asset for the individuals).  However, HMRC disagreed that there was a ‘special threat’ to Mr Brockhouse’s security.

Tax Tribunal Decision

The first-tier tribunal found in favour of HMRC.


It held that ‘special’ meant “exceptional in quality or degree, unusual, out of the ordinary” (Shorter English Dictionary; Lord Hanson v Mansworth (2004) SpC410).  There was “… far too little evidence” to conclude that Mr Brockhouse faced a special treat to his personal security.  Furthermore, what evidence there was led directly to the conclusion that the purpose of installing the fencing was to protect the land and stock, not solely to protect Mr Brockhouse’s personal security.

Our View

It might have helped the taxpayers’ case if their representative had been furnished with all of the factual evidence needed to present their case in the best light.  However, it seemed probable that the fencing was at least partly intended to protect the business against theft.  Therefore, it would not have had the ‘sole’ purpose of improving personal physical security and the taxpayers' claim was likely to fail.


View and save Capital Allowances Tax Case Review - Brockhouse V HMRC Commissioners as a PDF file. 

Tags for this article: capital allowances, plant, personal security, fencing

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