In Bluesparkle Ltd v HMRC (TC01743 – 24 January) a company (B) agreed to purchase the freehold of a hospital from a subsidiary company (L) in 2001 paying part of the purchase price immediately and the remainder in three instalments from 2005 to 2007. In 2005 B and L modified the agreement and described £400 000 of the amount due from B to L as a ‘premium’. B claimed a deduction for this amount in computing its profits. HMRC issued a closure notice rejecting the claim on the basis that the expenditure was capital. The First-tier Tribunal dismissed B’s appeal against this decision. Judge Cornwell-Kelly observed that the terms of the agreement ‘were evidently not typical of a bargain made at arms’ length and were in fact devised with VAT avoidance in mind’. He held that ‘on the face of it any payment under...
