Leekes Ltd v Revenue & Customs [2015] UKFTT 93 (TC) (27 February 2015)

Leekes Ltd v Revenue & Customs [2015] UKFTT 93 (TC) (27 February 2015)

There are no explicit streaming rules in s 343(3) ICTA 1988; streaming cannot be implied. Succession gives rise to a single surviving trade, and all losses of the predecessor are available to the successor for offset against the combined profits. The preferable interpretation is that all losses of the predecessor’s trade subsumed with the successor’s trade should be available for offset.

Citation
[2015] UKFTT 93 (TC)
Parties
Appellant: Leekes Ltd; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
27 February 2015
Procedural Posture
Corporation Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal allowed
Legal Topics
Loss Relief, Succession to Trade, Statutory Interpretation, Streaming of Losses
Tax Law Corporation Tax Loss Relief Succession to Trade Statutory Interpretation Streaming of Losses

Case Brief

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Parties

Leekes Ltd

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Corporation Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether losses made by Coles prior to succession are available to Leekes Ltd under s 343(3) ICTA 1988 or only against profits of the Coles trade post succession (streaming)
  2. 2 Interpretation of s 343(3) ICTA 1988 regarding streaming of losses

Ratio Decidendi

There are no explicit streaming rules in s 343(3) ICTA 1988; streaming cannot be implied. Succession gives rise to a single surviving trade, and all losses of the predecessor are available to the successor for offset against the combined profits. The preferable interpretation is that all losses of the predecessor’s trade subsumed with the successor’s trade should be available for offset.

Court Disposition

Appeal allowed

Orders

  • All losses of Coles available to Leekes Ltd for offset against combined profits
  • HMRC's disallowance of losses overturned