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Maco Door and Window Hardware (UK) Ltd v Revenue and Customs Commissioners. [2007] BTC 607

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Carnwath LJ:

The building in question houses a definitely identifiable part of their industrial operations and a quite separate activity, and that separate activity alone. This is in my view enough to satisfy the requirements of sub-s. This point was not in terms dealt with by the other members of the court. However, I think it is implicit that they agreed, since the argument if accepted would have been fatal to the taxpayer's case.

The Crown did not appeal. The taxpayer a holding company had a warehousing subsidiary Jacksons Ltd. In its warehouse it kept shoes of two types, some manufactured by another subsidiary Kilmarnock , and some bought in from outside suppliers. It was common ground that the Kilmarnock shoes qualified under the sub-section, whereas the latter did not. The different categories were not separated in the warehouse. The Crown did not pursue a contention that the use was within the retail shop exception.

Lord Reid with the agreement of the whole House said:. The question therefore comes to be whether this warehouse is in use for the purposes of that part of the warehouseman's trade which consisted in the storing of Kilmarnock shoes. Again taking the ordinary use of language, it appears to me that it clearly was.

Premises can be and often are in use for more than one purpose, and I think that the whole of this warehouse was in use for both parts of the warehouseman's trade, because both kinds of shoes could generally be found stored in every part of it. It concerned a claim by a landlord of light industrial premises for breach of the user covenant in the lease. The tenant's business consisted principally of purchasing used tyre casings for sale to remoulders.

The tyres were stored and inspected to see whether they were suitable for making re-moulds. Those thought to be suitable were then consigned to a re-moulder. The nature of its business meant that at any one time there would be a large number of tyres stored in the building awaiting despatch to a re-moulder. He held that it was used for storage within the equivalent of s. He did not think that it mattered that the storage was only part of the overall business. He reached this conclusion without referring to s. The stores sold groceries, household goods and other items.

The customers were mainly retail traders and caterers, who had access to most parts of the store and were able physically to remove the goods they wanted to buy from the shelves. Goods were paid for at a checkout and most customers removed their purchases in their own transport. Those items not available for immediate sale were,.

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Lightman J upheld the decision but on broader grounds. Since his reasoning contains a detailed analysis of the authorities, and it forms the foundation of Patten J's judgment in the present case, it is necessary to refer to it in more detail. In this case what is critical is the nature of the enterprise intended to be carried on and actually carried on by Bestway at the buildings and the role played by the stock in that enterprise. For a building is only used for storage if the purpose of keeping goods there is their storage as an end in itself: there is no such use for storage if the goods are kept there for some other purpose: consider Kaye v Burrows [] AC All the stock in the present case is kept in the buildings, not for storage, but for sale ….

The goods enter the buildings upon their final journey to the customers.

The six to eight weeks of stock at any time in the buildings may be likened to stock on an extension to the open shelves or on a conveyor belt to the open shelves. Far from being kept in reserve, the stock is in the process or in the course of being made available to purchasers at the buildings. The emphasised words in the last paragraph are a direct quotation from the speech of Viscount Dunedin in Kaye v Burrows at p.

But in any event I do not think that that decision should stand in the way of what is clearly the correct answer in this case. You may say, I think, without an abuse of language, that there is something organic about the whole which does not exist in its separate parts. Thus for example the trade of a garage proprietor may consist of two parts, a car showroom and a car repair shop. Likewise a trade may consist in making as well as selling surgical products ….

The choice between these two alternative constructions must depend on a consideration of the language used in s. On such a consideration I am satisfied that Mr Brennan's construction is correct. Its trade may be a composite one. Mr Brennan gave an apt example of the trade of a person carrying on a garage business. The use of a building for the composite trade may not qualify for allowances under s. I think that the primary purpose of s.