HMRC v Tower MCashback LLP1 (and cross-appeal): capital allowances

Alan Dolton

In HMRC v Tower MCashback LLP1 (and cross-appeal) (SC – 11 May) the Supreme Court has unanimously allowed HMRC’s appeal and dismissed the partnerships’ cross-appeals.

Two limited liability partnerships claimed capital allowances in respect of capital expenditure on computer software. 75% of the purchase price of the software was funded by ‘non-recourse loans’ which were indirectly made available by the vendor of the software.

HMRC rejected the claims on the grounds that the expenditure had been incurred ‘with a view to granting to another person a right to use or otherwise deal with any of the software in question’ within CAA 2001 s 45(4).

They issued closure notices against which the partnerships appealed. At the hearing of the appeals HMRC abandoned their original contention with regard to s 45(4) but defended the closure notices on alternative...

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