Tuesday, 15 February 2011

Tax allowance for cost of acquiring right to use software

Via this blogger's friends on the UKSC Blog comes this link to the news of a forthcoming hearing by the United Kingdom's Supreme Court. The case is Commissioners for Her Majesty’s Revenue and Customs (Appellant) v Tower MCashback LLP and another (Respondents).  According to the UKSC Blog,

"The Supreme Court will consider ... a substantive issue (whether expenditure on the acquisition of a right to use software, which was funded by non-recourse loans from the owner of the software, can qualify for an allowance under section 45 of the Capital Allowances Act 2001 (the “CAA”))".
The two-day hearing in this case will begin on 21 February 2011.

1 comment:

Anne Fairpo said...

I should add the caveat that Tower MCashback was (as it's name might suggest) a tax saving arrangement; any Supreme Court findings on this point are likely to be as restricted as the lower courts' findings. It won't be something of general application (at least, I hope the Supreme Court has more sense ...).

The key point is not whether a deduction is available generally, but whether the surrounding arrangements in this case were such that the tax deduction should be denied. The lower courts have previously found that the arrangements relating to the loans were irrelevant, that there was enough other economic substance..