UK tribunal sends £57 million quay-wall capital allowances claim back for reconsideration

The appeal has been remitted to a differently constituted First-tier Tribunal, so the judgment does not finally determine whether the expenditure qualifies. HM Courts & Tribunals Service published the decision on 4 November.^[1][2]

The statutory question

Mersey Docks built the wall as part of the Liverpool2 deep-water container terminal. It supports ship-to-shore cranes, provides mooring and retains reclaimed land. Section 11 of the Capital Allowances Act 2001 can permit allowances for capital expenditure on plant or machinery used for a qualifying activity. Section 22 and List B generally exclude docks, harbours, wharves, piers, marinas and jetties, while section 23 and List C preserve specified expenditure.^[1][3]

Material legal errors

The Upper Tribunal held that the earlier tribunal had analysed the wall and cranes as a composite asset and relied too directly on the dry-dock decision in Barclay, Curle. It had not adequately explained why mooring and crane support, rather than also retaining reclaimed land, were the wall’s primary functions. For List C item 1, it had used a necessity test instead of asking whether the expenditure had a sufficiently close connection with providing the machinery.^[1]

The Upper Tribunal also upheld the conclusion that List C item 24 did not apply. The quay wall was more aptly a wharf than a “jetty or similar structure”, and expanding item 24 to cover it would undermine the specific List B exclusion. It was also unclear whether the wall was provided mainly to carry plant or machinery.^[1][3]

Claim evidence remains decisive

Bespoke design and operational necessity do not by themselves make structural expenditure eligible. Port and infrastructure groups should separate an asset’s functions and document the required connection between structural expenditure and machinery. Taxpayers should not treat the £57.1 million claim as finally allowed or denied until the remitted process is complete.^[1]