P Degorce v HMRC

In P Degorce v HMRC (TC02593 – 19 March) a bank marketed a tax avoidance scheme whereby in a complex series of transactions a film company (GF) sold the rights in two films to a hedge fund manager (D) for a nominal price of £21.9m. D was only required to pay £4.8m of this as the balance of £17.1m was lent to him by a company associated with GF. Later on the same day D assigned the rights to GD (another company associated with GF) for £881k. D claimed the difference as a trading loss. HMRC rejected the claim on the basis that D was not trading and that the aim of the transactions was not to make profits but to ‘generate artificial tax losses for the participants’. D appealed contending that he was carrying on a trade of acquiring and exploiting film distribution...