Are grain stores eligible for tax relief?
The question of tax relief on grain stores has puzzled practitioners for some years. Buildings generally will not be eligible, but there is a specific exception for silos used for temporary storage. The prudent view has been to claim full allowance on specifically constructed structures such as cold stores or potato stores, where the building itself fulfils a function, Where a general purpose building can be used as an on-floor grain store, the claim has normally been restricted to the value of the processing machinery which is incorporated into, or used within the structure.
The case of May-v-HMRC which came before the First Tier Tribunal in November 2018 may give better guidance. Mr May erected a purpose built grain store designed to dry and condition the crop using external and pedestal fans, both temporary and permanent grain walling, heavy duty exterior walls and low headroom. As such the building was not suitable for general agricultural use.
HMRC sought to disallow the claims, taking the view that the building was not a silo for temporary storage, and that it was a building rather than a processing facility. The tribunal disagreed, noting that the structure met the dictionary definition of a “silo”, and it was specifically designed not only to store grain but also to dry it and to maintain it in marketable condition. The movable equipment and the building together constituted an item of processing machinery, not just a building in which processing operations took place.
MHA Moore and Smalley Tax Partner, David Bennett, commented “HMRC may still refer the case to the Upper Tier Tribunal, but potentially this decision will be important for clients who are looking at investing substantial sums in storage facilities which are more bespoke than simple buildings, and who may now be able to do so with greater certainty.”
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