The £57.13 million capital allowances claim for Liverpool2’s quay wall remains unresolved despite HMRC winning its Upper Tribunal appeal. Published on 4 November 2026, the decision set aside the taxpayer’s earlier victory. It highlights why claims must explain the asset itself, not simply the wider project.
A wall with competing functions
The 830-metre wall retains reclaimed land, protects the terminal and provides berthing. Rails, specialist foundations and anchors support ship-to-shore cranes and allow containers to pass between vessels and vehicles.
The First-tier Tribunal (FTT) treated the wall as cargo-handling apparatus, drawing on the dry-dock decision in Barclay Curle.
Three statutory steps
Under the Capital Allowances Act 2001, section 11 requires capital expenditure on providing plant or machinery. Section 22 excludes structures including wharfs. Section 23 provides exceptions, but List C does not automatically establish entitlement.
Explain the asset itself
The FTT identified the wall alone, yet effectively assessed the wall and cranes together. It also did not adequately explain the balance between operational and premises functions. Supporting machinery can be a function of either plant or premises; it is not conclusive.
Necessity is not enough
Applying Orsted, the Upper Tribunal rejected necessity alone as the basis for treating wall costs as expenditure on the cranes. A sufficiently close connection with the provision of the cranes is also required. The FTT’s reasoning under List C item 1therefore failed.
Exceptions and next steps
Item 24 failed because the substantial wharf was not a jetty or similar relatively small, narrow structure. Item 22, covering land alterations carried out solely to install plant or machinery, remains unresolved.
A differently constituted FTT will reconsider the affected issues, rather than rehear the entire case.
What should businesses do now?
Our view is that claims should link each legal argument to engineering evidence and identified costs. Businesses should retain drawings, loading specifications and final accounts. They should also investigate machinery-specific elements separately, without assuming that cost segregation itself makes the expenditure qualifying.
Conclusion
This is not the end of infrastructure claims. The Upper Tribunal did not finally determine that the wall was premises, nor did it reject every cost. However, the decision reinforces the importance of rigorous analysis and supporting evidence.
Labels such as ‘integral’ or ‘purpose-built’ cannot replace a reasoned explanation of why relief is available.
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