The Court of Appeal has overturned a ruling in the Upper Tribunal regarding a capital allowance sale and leaseback avoidance scheme, applying the Ramsay principle (W T Ramsay Ltd v IRC, 1982) and looking at the intention of the legislation as a whole.
The Ramsay principle posits that when a transaction comprises a series of pre-arranged artificial steps, devoid of any genuine commercial purpose other than tax avoidance, the proper course of action is to scrutinise the transaction as a whole.
The decision by the Court of Appeal will have far reaching implications in that it clearly resets the boundaries of what is a capital allowances avoidance scheme designed to increase the quantum of capital allowances claimed