Avoidance scheme fails

The taxpayer business was a holding company of a newspaper group. Its subsidiaries were regional newspaper firms.

Between 2003 and 2005 the subsidiaries assigned newspaper mastheads (unregistered trademarks) to the taxpayer which licensed them back for five years in return for payments totalling £51.4m.

The subsidiaries entered into loan agreements with the taxpayer and claimed a deduction for the amounts paid to the parent company. The taxpayer claimed the payments were not subject to corporation tax but fell within the capital gains regime. HMRC did not allow the deduction.

The First-tier Tribunal said trademarks recognised as constituting property were not assignable in gross but only in connection with the goodwill of the business concerned in the goods to which the mark was referable.

In this instance the assignments were in gross and were “void for mistake as to the assignability of the subject matter of the purported...