Inmarsat Global Limited v The Commissioners for HMRC

Inmarsat Global Limited v The Commissioners for HMRC

Section 78(1) of the Capital Allowances Act 1990 does not deem ownership to transfer to a successor unless actual ownership is acquired; since Inmarsat never acquired ownership of the satellites, it cannot claim capital allowances for launch costs incurred by IMSO. Section 61(4) does not apply as IMSO was not required under lease terms to launch the satellites, and launch costs do not constitute capital expenditure on provision of plant for allowance purposes without ownership.

Parties
Appellant: Inmarsat Global Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
28 July 2022
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
Capital Allowances, Succession to Trade, Machinery and Plant on Lease, Statutory Interpretation
Tax Law Corporate Law Capital Allowances Succession to Trade Machinery and Plant on Lease Statutory Interpretation

Case Brief

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Parties

Inmarsat Global Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether Inmarsat is entitled to capital allowances on launch costs incurred by IMSO under sections 61(4) and 78 of the Capital Allowances Act 1990
  2. 2 Interpretation and application of section 78 regarding succession to trade and deemed ownership
  3. 3 Whether launch costs constitute capital expenditure on the provision of plant under section 61(4)

Ratio Decidendi

Section 78(1) of the Capital Allowances Act 1990 does not deem ownership to transfer to a successor unless actual ownership is acquired; since Inmarsat never acquired ownership of the satellites, it cannot claim capital allowances for launch costs incurred by IMSO. Section 61(4) does not apply as IMSO was not required under lease terms to launch the satellites, and launch costs do not constitute capital expenditure on provision of plant for allowance purposes without ownership.

Court Disposition

Appeal dismissed

Orders

  • No entitlement to capital allowances for launch costs incurred by IMSO
  • No writing-down allowances to Inmarsat in respect of the satellites