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Eclipse Film Partners No. 35 v HMRC

In Eclipse Film Partners No. 35 v HMRC [2015] EWCA Civ 95 (17 February 2015) the Court of Appeal found that Eclipse 35 had not been trading.

Eclipse 35 a partnership and its members had entered into a complex series of transactions for the acquisition distribution and marketing of film rights.

The members had borrowed money to contribute to the capital of the partnership. They could only claim tax relief in respect of the interest if the loan was used wholly for the purpose of a trade carried on by Eclipse 35 (ITTOIA 2005 s 863 and ICTA 1988 ss 353 362).

The FTT had found that Eclipse 35 had not played ‘a meaningful part in the marketing and distribution of the films’; it had therefore not carried on a trade. The FTT’s decision had been upheld by the UT.

The Court of Appeal noted...

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