DCC Holdings: navigating the perilous seas of complex tax law

With the High Court finding itself compelled to apply complex repo legislation in a way that produced an economically unsatisfactory result, Chris Bates argues the solution is in the hands of Parliament and the draftsman.

Chris Bates is a tax partner at Norton Rose LLP. Chris can be contacted on 020 7444 3392 or chris.bates@nortonrose.com

‘It is something of a disgrace that in order to work out the tax consequences of an entirely ordinary commercial transaction one must refer to about 20 closely articulated and specific statutory provisions replete with cross references: and it is a matter of no great credit that the eventual method of charging tax is to postulate a notional sum paid under a hypothetical obligation, which notional payment is then itself treated “as if” it was something else so that it can be deemed to affect the repurchase price and create a fictional income flow. Having entered into such a maze of hypothesis, notion, fiction and deeming it would be no surprise to discover that the draftsman did not find himself quite where he intended or facing the direction he thought.’