Rupert Shiers (Hogan Lovells) considers the Court of Appeal judgment in Lloyds TSB Equipment Leasing (No. 1) and HMRC’s new-found enthusiasm for applying main purpose tests.
HMRC v Lloyds TSB Equipment Leasing (No. 1) Ltd [2014] EWCA Civ 1062 marks the first time in over ten years that the Court of Appeal has seriously considered a ‘main purpose’ type test. It has been reported elsewhere that the Court of Appeal decided that obtaining capital allowances was a main object of the relevant transactions and that the allowances were unavailable. That is not correct.
The decision is narrow. In essence it is that ‘main object or one of the main objects’ is a different test than ‘sole or main benefit’. More controversially the text of the First-tier Tribunal’s decision indicates a real risk...
