Greene King plc v HMRC builds on the same themes as Wetherspoon and Scottish & Newcastle, but is particularly important from a methodology and approach perspective.
The case involved large-scale refurbishment expenditure across a pub estate, with the taxpayer applying a structured approach to identifying qualifying plant across multiple sites.
The dispute went beyond individual asset classification and into how the claim itself had been constructed.
HMRC’s challenge was not simply that items had been wrongly classified, but that the methodology used to identify and quantify qualifying expenditure lacked sufficient linkage to the underlying assets and the reality of the works carried out. In particular, concern was raised where elements of the claim relied on standardised assumptions and broad allocations, rather than a detailed analysis of what had actually been installed at each property.
The Tribunal’s focus was therefore on whether the methodology accurately reflected the works undertaken. It placed significant weight on the need for a direct and demonstrable connection between the costs being claimed and the qualifying assets. Where costs had been derived using high-level percentages, or applied consistently across different sites without clear justification, the Tribunal was less willing to accept that they represented a reliable measure of qualifying expenditure.
In practice, the issue comes back to how closely the analysis aligns with the underlying facts. Approaches that rely on blanket percentage allocations across multiple projects, or that apply standard assumptions without clear linkage to the actual works, are far more likely to be challenged. Similarly, the inclusion of preliminaries, fees or overheads requires a clear connection to specific qualifying assets. Where that link cannot be demonstrated, those costs are more likely to be restricted.
By contrast, apportionments grounded in a clear distinction between qualifying and non-qualifying works, supported by project-level detail, are more likely to be accepted. Consistency of methodology remains important, but only where that methodology is driven by the facts of each site rather than assumed averages.
A key theme running through the decision is the importance of working papers. It is not enough to arrive at a figure; there must be a clear audit trail showing how each number has been derived, what assumptions have been made, and why those assumptions are reasonable. Without that, HMRC are far more likely to challenge the claim, and it becomes significantly harder to demonstrate that the figures reflect the underlying expenditure.
From a practical perspective, this aligns closely with current HMRC enquiry trends. The focus is increasingly on how a claim has been constructed and evidenced, not just what has been included. A technically correct position can still fail if the supporting analysis cannot be demonstrated.
The key takeaway is that capital allowances claims need to be both technically accurate and evidentially robust. The methodology applied and the supporting working papers are what allow a claim to stand up to scrutiny and justify the conclusions reached.
