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Cobalt: golden contracts, EZAs and legitimate expectation

Speed read
The recent Upper Tribunal decision in Cobalt Data Centre 2 LLP and Cobalt Data Centre 3 LLP v HMRC is a rare partial win for investors in a structure designed to give tax relief boosted by borrowings. In this case, the investment involved constructing properties in an enterprise zone. HMRC was unsuccessful in arguing that none of the allowances claimed were available, with the UT deciding that an apportionment was necessary. However, the UT said HMRC had to stand by industry guidance given in the 1990s which boosted the available allowances. An HMRC appeal looks likely.

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