Court of Appeal gives judgment on meaning of “ceases to own” in context of capital allowances legislative regime

Commissioners for HM Revenue and Customs v Altrad Services Limited [2024] EWCA Civ 720

Jonathan Davey KC has received judgment from the Court of Appeal in an appeal concerning a claim for capital allowances in respect of expenditure on plant and machinery.

The Court of Appeal held that, applying the Ramsay principle (WT Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300) and relying on the Supreme Court’s decision in Rossendale Borough Council v Hurstwood Properties (A) Ltd [2021] UKSC 16, on a purposive construction of section 61 of the Capital Allowances Act 2001 the statutory requirement, as a necessary condition of being eligible for the tax allowances, that the relevant person “ceases to own” the assets in question was not met in circumstances where, as part of a tax scheme, the taxpayer disposed of the assets only briefly before almost immediately reacquiring them, as had always been planned. The Court of Appeal considered that such a scenario did not constitute cessation of ownership “as a matter of ordinary language, and in a real and practical sense” as the legislation required (at [82]).

Accordingly, the Court of Appeal decided the appeal in the Appellants’ favour, overturning the Upper Tribunal’s decision ([2022] UKUT 185 (TCC)) to the contrary and agreeing with the decision of the First-tier Tribunal ([2020] UKFTT 62 (TC)). Jonathan Davey KC, David Milne KC and Barbara Belgrano (Pump Court Tax Chambers) act for the Appellants; Jonathan Peacock KC and Edward Hellier (11 New Square Chambers) act for the Respondents.

Read the full judgment here