On Tuesday 26 October the Advocate General (Mazak) gave his opinion in HMRC v Weald Leasing (Case C-103/09). The case concerned an arrangement used by an insurance group Churchill to defer irrecoverable VAT on business assets by purchasing and leasing them through a subsidiary Weald Leasing and an unconnected third party Suas. The lease rentals were below open market value thus extending the period of deferral. The reason for inserting Suas into the structure was to prevent HMRC from being able to impose market value on the lease rentals under VATA 1994 Sch 6 para 1.
To the relief of many exempt businesses throughout the EU the Advocate General has recommended that the ECJ should hold that leasing to defer irrecoverable VAT is not by itself tax avoidance. He also stated that the use of a wholly owned subsidiary or a...
