Newey: a gypsy’s warning

The Court of Appeal’s recent judgment in HMRC v Newey (t/a Ocean Finance) [2018] EWCA Civ. 791 is the latest, but not the last, word in this litigation. It concerns a cross-border scheme, devised by a loan-broking business, to avoid irrecoverable VAT on its advertising spend. Issues raised include whether the contractual framework determined the identity of the recipient of the advertising supply; the factors relevant to evaluating whether the scheme conflicted with economic and commercial reality (thereby engaging the Halifax ‘abuse’ principle); and the powers and duties of appellate bodies in relation to factual findings by the First-tier Tribunal. Tax planners take note: proceed with caution and be prepared for unpleasant surprises.