Court permits HMRC's new ground of appeal

The taxpayers entered into arrangements designed to enhance their entitlement to capital allowances on assets they already owned. Broadly they sold the assets to a bank the bank leased them back to the taxpayers for three or four weeks and then the bank sold the assets to the taxpayers. Under an anomaly in the legislation (later corrected by FA 2011) the taxpayers said that they did not have to bring a disposal value into account for capital allowances purposes on the initial disposal but were entitled to claim allowances on the cost of the reacquisition. In essence the taxpayers said they had ceased to own the assets when they sold them to the bank. HMRC argued on Ramsay grounds that this was not the case.

The First-tier Tribunal dismissed the taxpayer’s appeal but the Upper Tribunal overturned that decision.

HMRC wished...