Hawksbridge LLP v Revenue & Customs [2014] UKFTT 416 (TC) (07 May 2014)

Hawksbridge LLP v Revenue & Customs [2014] UKFTT 416 (TC) (07 May 2014)

The Tribunal found that the arrangements entered into by the appellant partnerships were essentially tax avoidance schemes. The expenditure claimed as losses was not incurred wholly and exclusively for the purposes of trade, and much of it was capital rather than revenue in nature. The accounts were not prepared in accordance with GAAP. The partnerships' activities were not conducted on a commercial basis with a genuine view to profit. The Ramsay principle applied, and the fiscal effects of the arrangements were to be disregarded. The appeals against the closure notices were substantially dismissed, with only modest losses allowed.

Citation
[2014] UKFTT 416
Parties
Appellant: Acornwood LLP; Appellant: Bastionspark LLP; Appellant: Edgedale LLP; Appellant: Starbrooke LLP; Appellant: Hawksbridge LLP; Joint Referrers: Seven Individual Referrers; Respondent and Joint Referrer: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
07 May 2014
Procedural Posture
Tax Appeal and Joint Reference Under S 28 ZA TMA 1970 / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeals substantially dismissed
Legal Topics
Income Tax, Corporation Tax, Loss Relief, Tax Avoidance, Partnership Taxation, Sideways Relief, Capital Vs Revenue Expenditure
Tax Law Income Tax Corporation Tax Loss Relief Tax Avoidance Partnership Taxation Sideways Relief Capital Vs Revenue Expenditure

Case Brief

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Parties

Acornwood LLP

Appellant

Bastionspark LLP

Appellant

Edgedale LLP

Appellant

Starbrooke LLP

Appellant

Hawksbridge LLP

Appellant

Seven Individual Referrers

Joint Referrers

The Commissioners for Her Majesty’s Revenue & Customs

Respondent and Joint Referrer

Procedural Posture

Tax Appeal and Joint Reference Under S 28 ZA TMA 1970 / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether first-year losses incurred by the partnerships are allowable for tax purposes
  2. 2 Whether the expenditure was wholly and exclusively for the purposes of trade
  3. 3 Whether the expenditure was of a capital or revenue nature

Ratio Decidendi

The Tribunal found that the arrangements entered into by the appellant partnerships were essentially tax avoidance schemes. The expenditure claimed as losses was not incurred wholly and exclusively for the purposes of trade, and much of it was capital rather than revenue in nature. The accounts were not prepared in accordance with GAAP. The partnerships' activities were not conducted on a commercial basis with a genuine view to profit. The Ramsay principle applied, and the fiscal effects of the arrangements were to be disregarded. The appeals against the closure notices were substantially dismissed, with only modest losses allowed.

Court Disposition

Appeals substantially dismissed

Orders

  • Closure notices upheld with only modest losses allowed for tax purposes
  • Sideways relief not available except to a limited extent