In the capacity of hut that has to be knocked down (7)
I believe the answer is:
quashed
'be knocked down' is the definition.
'in the capacity of hut that has' is the wordplay.
'in the capacity of' becomes 'qua' (I've seen this before).
'hut' becomes 'shed' (I've seen this before).
'that has' says to put letters next to each other.
'qua'+'shed'='QUASHED'
'to' acts as a link.
(Other definitions for quashed that I've seen before include "Sat on" , "Annulled as court conviction might be" , "Suppressed" .)