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Lloyds Bank Leasing (No. 1) v HMRC

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In Lloyds Bank Leasing (No. 1) v HMRC [2015] UKFTT 401 (14 August 2015) the FTT found that the obtaining of capital allowances had been one of the main objects of a transaction so that tax relief was not available.

Lloyds Bank Leasing (LBL) a finance leasing company had incurred nearly £200m in expenditure on the purchase of two ships. The issue was whether the main object or one of the main objects of the relevant transaction – which had included the letting of the ships – had been to obtain writing-down allowances. If this was the case capital allowances should be denied under CAA 2001 s 123(4).

The FTT noted that the draftsman had not intended to confine the application of s 123(4) to those who enter into artificial or contrived arrangements or to transactions...

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