Stop Press: BMBF v Mawson decision

For further information contact Richard Clarke (020 7804 2243; richard.d.clarke@uk.pwcglobal.com)

On 13 December the Court of Appeal found in favour of the taxpayer reversing the High Court judgement in BMBF v Mawson . The case involved a collateralised sale and leaseback but the decision of Justice Park in the High Court potentially had a wider impact. This was because the Revenue argued that to apply legislation with a commercial meaning, it was necessary to hypothetise an overarching commercial rationale which could alter the tax characterisation. On this basis the taxpayer, BMBF, had been denied capital allowances although it was accepted that they would be available based on the transactions and motives of BMBF. The Court of Appeal considered that the relevant legislation (s24 CAA 1990) should be given a legalistic construction but even if it should be interpreted commercially, on the factual evidence, capital allowances were still due.