»Ê¹ÚÌåÓýapp

In Bullcroft Main Collieries Ltd v O’Grady [1932] 17TC93 the colliery chimney which carried away the smoke and fumes from the furnaces became dangerously unsafe. »Ê¹ÚÌåÓýapp chimney was a structure quite separate from the other surface buildings, connected to the furnace only by the flues. »Ê¹ÚÌåÓýapp company constructed a new chimney on a site nearby. »Ê¹ÚÌåÓýapp new chimney was admitted to be an improvement over the old. »Ê¹ÚÌåÓýapp old chimney had been replaced, not repaired, and the company claimed an allowance based on the estimated cost of a like for like replacement. »Ê¹ÚÌåÓýapp Special Commissioners decided that the cost of replacing the chimney was capital.

»Ê¹ÚÌåÓýapp High Court concurred with that decision. At page 101 Rowlatt J explained that every repair involves a replacement but the critical question is what is the ‘entiretyâ€�. Replacing the entirety is not repairing the old, but having something new:

Of course, every repair is a replacement. You repair a roof by putting on new slates instead of the old ones, which you throw away. »Ê¹ÚÌåÓýappre is no doubt about that. But the critical matter is…what is the entirety? »Ê¹ÚÌåÓýapp slate is not the entirety of the roof. You are repairing the roof by putting in new slates. What is the entirety? If you replace in entirety, it is having a new one and it is not repairing an old one. I think that it is very largely a question of degree, but it seems to me the Commissioners have taken the only possible view here.

»Ê¹ÚÌåÓýapp case of Samuel Jones & Co (Devonvale) Ltd v CIR [1951] 32TC513, provided a contrast to Bullcroft. »Ê¹ÚÌåÓýapp company carried on a trade of paper processing. »Ê¹ÚÌåÓýapp company’s factory chimney was situated in the middle of the factory in a block of buildings containing furnaces and steam boilers. »Ê¹ÚÌåÓýapp chimney was old and had become unsafe. A new chimney, which was not an improvement, was built close to it. »Ê¹ÚÌåÓýapp flues were extended and connected to the new chimney. »Ê¹ÚÌåÓýapp old chimney was demolished. »Ê¹ÚÌåÓýapp Special Commissioners regarded themselves as bound by Bullcroft. »Ê¹ÚÌåÓýappy decided that the cost of the new chimney was capital expenditure. But they decided that the cost of removing the old chimney was getting rid of an encumbrance and was revenue.

On appeal, the Lord President decided that the whole of the expenditure was admissible. »Ê¹ÚÌåÓýapp new chimney was physically, commercially and functionally an inseparable part of an entirety. »Ê¹ÚÌåÓýapp entirety was the factory. »Ê¹ÚÌåÓýapp chimney was doubtless an indispensable and integral part but nonetheless one of many subsidiary parts of a single industrial profit-earning undertaking.