The cost of cars provided to mini cab drivers for hire were fixed assets giving rise to capital allowances, and not revenue items of stock.
The appellant (a partnership) was a mini cab, car hire and courier business. It normally had around 45 self-employed drivers, and advertised itself as a taxi business. The partnership purchased second-hand vehicles as ‘spare cars’, which were made available for use by the mini cab drivers when their own car was off the road or otherwise unavailable.
The appellant included in its 'cost of sales' the cars purchased. The cars were in most cases transferred to the driver once they had 'ceased to have any economic value'. The appellant’s description of the arrangement included that following the partnership’s purchase of a vehicle, it was offered to the driver under terms of sale. On acceptance, an agreement on price and a payment schedule was arranged, and a document
