David Southern QC (Temple Tax Chambers) examines the Court of Appeal decision.
Special law versus general law
The litigation in Union Castle Mail Steamship Co Ltd v HMRC [2020] EWCA Civ 547 concerned the taxation of derivatives held in an investment fund.
A tax system can either apply its general tax rules to derivative contracts or enact a special code of rules applying to derivatives. For coherence of the tax system the balance of advantage lies in having a special code.
In the 1990s the UK took a policy decision to introduce special codes of taxation for derivatives and for financial instruments generally. This decision was manifested in a trilogy of legislation: FA 1993 (foreign exchange gains and losses); FA 1994 (financial instruments); and FA 1996 (loan relationships).
In 2002 foreign exchange gains and losses were split between loan relationships and derivative...
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David Southern QC (Temple Tax Chambers) examines the Court of Appeal decision.
Special law versus general law
The litigation in Union Castle Mail Steamship Co Ltd v HMRC [2020] EWCA Civ 547 concerned the taxation of derivatives held in an investment fund.
A tax system can either apply its general tax rules to derivative contracts or enact a special code of rules applying to derivatives. For coherence of the tax system the balance of advantage lies in having a special code.
In the 1990s the UK took a policy decision to introduce special codes of taxation for derivatives and for financial instruments generally. This decision was manifested in a trilogy of legislation: FA 1993 (foreign exchange gains and losses); FA 1994 (financial instruments); and FA 1996 (loan relationships).
In 2002 foreign exchange gains and losses were split between loan relationships and derivative...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
