Tribunal tears up Next鈥檚 tax relief claim
A multi-million pound tax allowance claim made by one of the UK鈥檚 largest clothing retailers has been rejected for the second time by a tax tribunal.
Next Distribution Limited, part of the Next Group Plc, claimed Industrial Buildings Allowance (IBA) on 拢19 million it spent on constructing two buildings used for warehousing and other activities.
Under the now-defunct IBA, businesses could write off some of their construction costs if the sites being built were used to subject goods to a process or to store goods on their arrival in the UK.
HM Revenue and Customs (HMRC) refused Next鈥檚 claim for the allowance on the grounds that unpacking bulk deliveries and repackaging them in smaller packages was beyond the scope of the allowance. The company鈥檚 appeal against the decision was dismissed by a and that decision has now been upheld by the Upper Tribunal. This decision safeguards about 拢2.8 million of revenue.
Jim Harra, Director General, Business Tax, HMRC, said:
HMRC鈥檚 decision to reject Next鈥檚 claim for this tax relief has now been backed by two tribunals.
This case shows that, when any business 鈥� large or small 鈥� tries to claim capital allowances beyond their intended scope, HMRC will challenge it, including through the courts if necessary.