Cases - Benson v The Yard Arm Club Ltd

Record details

Name

Benson v The Yard Arm Club Ltd

Date

[1979]

Citation

53 TC 67

Legislation

• Capital Allowances Act 1969
• Finance Act 1971

Keywords

Capital allowances - plant and machinery - apparatus used for purpose of a business - functional test - premises test - whether an old ship adapted as a floating restaurant was a premises where a trade was carried on - Capital Allowances Act 1969, s. 18 - Finance Act 1971, s. 41

Summary

The test of whether an item is apparatus used in carrying on a business is sometimes called the functional test. In this case, Buckley LJ stated:

'The functional test provides the criterion to be applied. Is the subject matter the apparatus or part of the apparatus employed in carrying on the activities of the business?'

In Benson v The Yard Arm Club Ltd the company claimed plant and machinery allowances on an old ship that was adapted for use as a floating restaurant. The ship was the structure within which the restaurant trade was carried on, rather than apparatus with which it was carried on. In the Court of Appeal, Templeman LJ said that he could see no distinction between a restaurant on the Thames and a fish and chip shop in Bethnal Green. Both act as premises in which the trade is carried on.

Note that the functional test is not whether an asset has a function. All business assets have a function. The test is whether the asset functions as apparatus used in carrying on the activities of the business. For example, an asset that functions as the business premises is not plant, as it is not apparatus used in carrying on the activities of the business.