Yarmouth v France is the foundational case for capital allowances, establishing the definition of plant as apparatus used in carrying on a business. While the facts are far removed from modern property claims, the principle remains central and continues to underpin how the legislation is applied in practice.
The case itself involved a horse used in a business, and the question was whether it could be treated as plant. The Court confirmed that plant is not limited to machinery but extends more broadly to assets that are actively used in carrying on the trade. This shifts the focus away from the nature of the asset itself and towards the role it performs within the business.
The breadth of this principle is illustrated in later case law. In Hampton v Fortes Auto Services Ltd, a guard dog used to protect business premises was treated as plant, reinforcing that the analysis turns on the function performed rather than the form of the asset.
However, the definition is not as wide as it first appears. It needs to be applied alongside the distinction that has developed through later case law between apparatus and setting. The courts have consistently drawn a line between assets that carry out the trade, and those that simply provide the environment in which it takes place.
In practice, identifying that an asset is used within the business is only the starting point. The analysis comes back to function. The key question is whether the asset is actively involved in carrying on the trade, or whether it forms part of the backdrop against which that trade is conducted. It is this distinction that ultimately determines whether expenditure falls within the capital allowances regime.
The importance of this case is not in the specific facts, but in the principle it established. It established a broader concept of plant, but that interpretation is always balanced against the distinction between apparatus and setting. That distinction continues to sit at the heart of capital allowances analysis today and underpins how later cases are approached in practice.
