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Scotts Atlantic Management Ltd (in members’ voluntary liquidation) and others (TC2704)
The taxpayers were companies that organised partnerships to finance films. They made indirect contributions to employment benefit trusts which were lent to the two main shareholders and two key employees.
The taxpayers claimed a corporation tax deduction in respect of these payments.
HMRC refused the claim saying the payments were in effect the distribution of profits and not employee benefit contributions (FA 2003 Sch 24 para 1). The companies appealed.
The First-tier Tribunal said the taxpayers’ intention was to obtain a tax deduction that would not ordinarily be expected and that was the opposite of what parliament intended. The contributions resulted in a duality of purpose which was fatal to claim for the deductions.
The judge noted that one of the company directors had “not only lied to the tribunal in a material way but he appeared also to have fabricated evidence...
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