No error in law

The taxpayers were a group of companies that set up a complex scheme that involved the sale of demonstrator cars to captive leasing companies which leased the vehicles to dealerships within the group and assigned the cars and agreements to a Jersey subsidiary of a bank.

The bank transferred the vehicles and leases as a going concern to another group company. They were then sold to customers by the dealerships and VAT was accounted for on the profit margin on the sale rather than on the full sale price.

HMRC said the scheme was artificial and designed to provide the taxpayers with a tax advantage. The taxpayers appealed.

The First-tier Tribunal (FTT) allowed the appeal but was overturned by the Upper Tribunal which found the FTT thad made an error in law: the overwhelming aim of the scheme was to obtain an illegitimate tax advantage ...