The Commissioners For HMRC v Altrad Services Limited & Anor
[2024] EWCA Civ 720
Altrad Services Limited & Anor v The Commissioners for HMRC
3 May 2023
[2023] EWCA Civ 474
Court of Appeal
Two companies tried a clever tax trick involving selling and leasing back equipment. The tax man (HMRC) initially missed a part of the trick. The court let HMRC challenge this missed part but said they'll assume the companies' goal was to keep the equipment to make things fair.
Key Facts
- •Altrad Services Ltd and Robert Wiseman and Sons Ltd (Taxpayers) appealed closure notices from HMRC restricting capital allowance claims from 2010 transactions.
- •Taxpayers sold plant & machinery to a leasing company, leased it back shortly, and repurchased it with a put option.
- •HMRC argued the Taxpayers didn't cease ownership (s61(1)(a) CAA 2001) and the option price wasn't qualifying expenditure (s11(4)(a) CAA 2001).
- •The Upper Tribunal (UT) sided with Taxpayers on the ownership issue but HMRC appealed to the Court of Appeal.
Legal Principles
A person ceases to own plant or machinery when they sell it.
Section 61(1)(a) Capital Allowances Act 2001
Expenditure is qualifying if it's capital expenditure on providing plant or machinery for a qualifying activity.
Section 11(4)(a) Capital Allowances Act 2001
Appellate courts are cautious about allowing new points on appeal requiring new evidence or altering trial conduct.
Singh v Dass [2019] EWCA Civ 360
Whether a payment is for a trade purpose is a question of fact.
Vodafone Cellular Ltd v Shaw (Inspector of Taxes) [1997] STC 734
Ramsay principle applies: The court looks at the substance over form of a transaction to determine tax liability.
Ramsay WT Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300
Outcomes
HMRC granted permission to appeal on Ground 2 (challenging the Option Price as qualifying expenditure).
While Ground 2 was a new point, the court determined it was a matter of law rather than fact and could be addressed without substantial prejudice to the taxpayers if certain assumptions are made regarding taxpayer intent.
The court will assume that the Taxpayers’ subjective intention in paying the Option Price was to reacquire the Assets for use in their businesses to mitigate prejudice.
This assumption addresses the potential prejudice caused by the late introduction of Ground 2.
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