Expenditure on repairing a yard was held to be revenue expenditure and not capital.
The yard is used to unload articulated lorries, to move those lorries, and to store trailers.
Before the work was done, the yard has not been resurfaced for many years. It was in a poor condition. In some areas, the surface had broken up, making it unsuitable for forklift trucks. Weeds grew through the yard so that parts of it appeared green.
Before the current work, the yard was patched up twice a year using gravel. Forklift trucks would soon damage these repairs.
The work involved removing a surface area of 1,675 square metres, levelling the sub-surface to allow water to drain off to a grass bank and not to the back of the property, resurface the area with reinforced concrete, lay 40 square metres of cobbles, and add a drainage channel. There was no increase in the size of the area, and no increase in its loading capacity.
HMRC maintained that this was capital expenditure as, among other reasons, it was replacing the yard rather than repairing it. The useable area of the yard had increased by concreting over large patches of grass. The use of reinforced concrete and addition of a drainage channel represented an improvement.
The taxpayer argued that there was no improvement or increase in useable area. The work had simply restored the yard to its previous standard. The use of modern materials had not changed the function or capacity of the yard.
The tribunal found that this was a repair and therefore allowed the taxpayer’s appeal.
The case report can be downloaded from
Steadfast Manufacturing & Storage Ltd [2020] TC 7770 [20.07/10]