New Angel Court Ltd v Adam (Inspector of Taxes): ChD 25 Jul 2003

The taxpayer company employed a subsidiary company through which it conducted its trade in land. It then sought to represent the profits from that subsidiary within its own accounts as trading profits for corporation tax purposes. The commissioner viewed the arrangement as window dressing to maximise claims of expenditure against income.
Held: The rule required a company to show that the subsidiary had been acquired as trading stock, but any fiscal motive was irrelevant. A transaction might be ineffective where it was inexplicable save on fiscal grounds looked at as a whole. The asset had to be acquired in order to be sold in the normal course of trade and for profit. In the end it was a matter of fact for the commissioners. In this case they had directed themselves correctly in law, looking at the group as a whole. Appeal dismissed.


Lawrence Collins J


Times 08-Aug-2003, [2003] EWHC 1876 (Ch), Gazette 02-Oct-2003




England and Wales


CitedEdwards (Inspector of Taxes) v Bairstow HL 25-Jul-1955
The House was asked whether a particular transaction was ‘an adventure in the nature of trade’.
Held: Although the House accepted that this was ‘an inference of fact’, on the primary facts as found by the Commissioners ‘the true and only . .
CitedReed v Nova Securities Ltd 1985
In order to convert an allowable loss into a trading loss to secure a tax advantage, it was only necessary that there had to have been an acquisition by a trading company ‘as trading stock’ . .
CitedCoates v Arndale Properties Ltd 1984
A transaction might be so clearly inspired by fiscal considerations that its shape and character as a trading transaction would be insufficient to preserve its tax value as such. . .
CitedOverseas Containers (Finance Ltd) v Stoker 1989
A transaction must be looked at as a whole in order to establish whether it was a genuine trading transaction eligible for tax relief, or was an action engendered solely by fiscal motives. . .
CitedEnsign Tankers (Leasing) Ltd v Stokes (Inspector of Taxes) HL 6-May-1992
The appellants entered into partnerships with a film production company. By doing so they intended to make available to themselves first year allowances on the capital expenditure incurred. Loan agreements protected them from any eventual loss.

Cited by:

Appealed toNew Angel Court Ltd v Danny Adam (HM Inspector of Taxes) ChD 16-Mar-2004
The taxpayer company had acquired an asset from a company within the same group. It had been treated as trading stock. The inspector sought to deny transfer of the resulting trading loss between the companies.
Held: The claim and appeal was to . .
Lists of cited by and citing cases may be incomplete.

Capital Gains Tax

Updated: 08 June 2022; Ref: scu.185839