A building which was an industrial building immediately before
it becomes temporarily disused is treated as an industrial building
while it is temporarily disused. This means that IBA continues.
There is no time limit on the length of a period of temporary
disuse unless the building was a qualifying hotel. A qualifying
hotel which becomes temporarily disused is treated as a qualifying
hotel for two years after the end of the chargeable period in which
the temporary disuse begins but for no longer.
You should accept that a building is temporarily disused if
it is capable of being used for something. It does not need to be
capable of being used for a qualifying trade. Any potential use is
good enough. If it is not capable of further use for any purpose it
is not temporarily disused.
The taxpayer must genuinely regard the building as
temporarily out of use. This will not be the case where the
taxpayer decides, for example, to let the building go to rack and
ruin because he has redevelopment plans in mind. Then the building
will cease altogether to be used and there will be a balancing
event
CA35050.
Disuse of a building is temporary if the disuse occurs
between two periods of use. It is implicit that the benefit of
treating the building as being in temporary disuse is only
available provided that the building is, in fact, used again. So a
building will not be temporarily disused where, say, it is left
empty for three years and then demolished.
For example, a company that manufactures typewriters may
decide to change to the manufacture of word processors. As a
result, it leaves its factory standing empty for a few months after
the manufacture of typewriters stops and before the manufacture of
word processors begins. Those few months are a period of temporary
disuse. Alternatively, the company may leave the factory standing
empty after the manufacture of typewriters ends so that the
building can be demolished. That period of disuse is not a period
of temporary disuse.
A period of disuse can be protected by the Section 285
legislation if the next period of use is by the next owner of the
relevant interest.
A building may at first appear to be genuinely temporarily
disused and the taxpayer claims the benefit of Section 285 in good
faith. Later, perhaps because of a recession, it becomes clear the
disuse will not be temporary. In such a case the earlier
application of Section 285 should not be opposed. Any allowances
given during the period of apparent temporary disuse will be dealt
with in the balancing adjustment required when there is a balancing
event; for example, when the site is sold for redevelopment or it
is clear that the building has ceased altogether to be used. The
period of disuse will be treated as non-qualifying use and the
balancing allowance will be reduced or the balancing charge will be
increased accordingly.
