A Capital Allowances case Inmarsat Global Limited and The Commissioners for Her Majesty’s Revenue and Customs UT/2019/0167 V), has been refused by the Upper Tier Tribunal.
The case involved claiming the launch costs for 6 satellites in the 1990’s. The original entity that owned and built the satellites was exempt from tax, so when Inmarsat incurred the costs of launching, not the cost of the satellites, they realised after the event that they would miss out of the very valuable tax relief.
The costs may have been allowable as ancillary to the trade, however at the time of launches, they did not own nor had built the satellites. There was a finance lease in place for the ownership of the satellites, who claimed capital allowances on their construction.
Inmarsat’s basis for claim was that there was succession to the trade when they took on the leases after the launch costs had been incurred. However, the FTT argued that S78 of CAA 1990 did not apply because the satellites never belonged to the Inmarsat at the time of the launch costs were incurred and had not incurred the cost on the satellites.
This case highlights that capital allowances is a complex area, and advice should always be considered before the expenditure takes place, to ensure that a claim can be successful.