“(1) IMSO entered into agreements (the ‘Construction Contracts’) with a satellite construction company (British Aerospace Plc in the case of the I-2 Satellites and General Electric Technical Services Company Inc in the case of the I-3 Satellites) for the construction and sale of the Satellites. (2) However, IMSO never took delivery of the Satellites pursuant to those contracts. Instead financial lessors (‘Lessors’) ([North Sea Marine Leasing Company (‘NSM’)] in the case of the I-2 Satellites and [Abbey National December Leasing (3) Limited (‘Abbey’)] in the case of the I-3 Satellites) obtained, by means of novation, the benefit and burden of relevant aspects of the Construction Contracts so that the Lessors obtained the right to delivery of the Satellites and the obligation to pay for them. (3) The Lessors agreed to lease the Satellites to [IMSO] in return for periodic rental payments (the ‘Leases’). The intentional ignition of any first stage engine of the launch vehicle would trigger the commencement of the term of the Leases. (4) The Satellites were entirely useless for their intended purposes until they were launched into orbit …. Accordingly, IMSO entered into contracts for the launch of the Satellites with various parties. IMSO paid the launch costs under those contracts.”
“It is reasonable to infer that at some point after it entered into its final launch contract for the I-2 Satellites, on31 March 1988 , IMSO realised that its chosen structure would be inefficient from a tax perspective. IMSO, as a tax-exempt body, could not benefit from the significant capital allowances that capital expenditure on the Satellites would attract. By contrast, if that capital expenditure was incurred by Lessors, who were subject to tax, the Lessors could set capital allowances on the Satellites against their other tax liabilities or those of their respective groups with the tax benefit of those capital allowances shared with IMSO in the form of reduced lease rental payments. Accordingly, the decision was taken to novate the Construction Contracts to the Lessors, which would enable the Lessors to claim capital allowances on the costs of acquiring the I-2 Satellites and to enter into the Leases. The result of this change of course was that, at the time the Lessors became party to the arrangements relating to the I-2 Satellites, IMSO was already party to launch contracts.”
“24. Writing-down allowances and balancing adjustments. (1) Subject to the provisions of this Part, where— (a) a person carrying on a trade has incurred capital expenditure on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and (b) in consequence of his incurring that expenditure, the machinery or plant belongs or has belonged to him, allowances and charges shall be made to and on him in accordance with the following provisions of this section. … (2) … for any chargeable period for which a person within subsection (1) above has qualifying expenditure which exceeds any disposal value to be brought into account in accordance with subsection (6) below, there shall be made to him— (a) unless the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (‘a writing-down allowance’) equal to— (i) 25 per cent of the excess, or (ii) … (b) if the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (‘a balancing allowance’) equal to the whole of the excess. … (5) For any chargeable period for which a person’s qualifying expenditure is less than the disposal value which he is to bring into account, there shall be made on him a charge (‘a balancing charge’), and the amount on which the charge is made shall be an amount equal to the difference. (6) … the disposal value to be brought into account by a person for any chargeable period is the disposal value of all machinery or plant— (a) on the provision of which for the purposes of the trade he has incurred capital expenditure; and (b) which belongs to him at some time in the chargeable period; and (c) in respect of which, in the chargeable period, one of the following events occurs, namely— (i) the machinery or plant ceases to belong to him; (ii) he loses possession of the machinery or plant in circumstances where it is reasonable to assume that the loss is permanent or, in the case of machinery or plant which was in use for mineral exploration and access, he abandons the machinery or plant at the site where it was in use for that purpose; (iii) the machinery or plant ceases to exist as such (as a result of destruction, dismantling or otherwise); (iv) the machinery or plant begins to be used wholly or partly for purposes which are other than those of the trade; (v) the trade is permanently discontinued (or is treated by virtue of any provision of the Tax Acts as permanently discontinued); and that is the first such event to occur ….” (a) a person carrying on a trade has incurred capital expenditure on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and (b) in consequence of his incurring that expenditure, the machinery or plant belongs or has belonged to him, (a) unless the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (‘a writing-down allowance’) equal to— (i) 25 per cent of the excess, or (ii) … (b) if the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (‘a balancing allowance’) equal to the whole of the excess. (a) on the provision of which for the purposes of the trade he has incurred capital expenditure; and (b) which belongs to him at some time in the chargeable period; and (c) in respect of which, in the chargeable period, one of the following events occurs, namely— (i) the machinery or plant ceases to belong to him; (ii) he loses possession of the machinery or plant in circumstances where it is reasonable to assume that the loss is permanent or, in the case of machinery or plant which was in use for mineral exploration and access, he abandons the machinery or plant at the site where it was in use for that purpose; (iii) the machinery or plant ceases to exist as such (as a result of destruction, dismantling or otherwise); (iv) the machinery or plant begins to be used wholly or partly for purposes which are other than those of the trade; (v) the trade is permanently discontinued (or is treated by virtue of any provision of the Tax Acts as permanently discontinued); and that is the first such event to occur ….”
“Where— (a) a lessee incurs capital expenditure on the provision for the purposes of a trade carried on by him of machinery or plant which he is required to provide under the terms of the lease, and (b) the machinery or plant is not so installed or otherwise fixed in or to a building or any other description of land as to become, in law, part of that building or other land, then, if the machinery or plant would not otherwise belong to him, the machinery or plant shall be treated for the purposes of this Part as belonging to him for so long as it continues to be used for the purposes of the trade; but, as from the determination of the lease, section 24(6) shall have effect as if the capital expenditure on providing the machinery or plant had been incurred by the lessor and not by the lessee. In relation to any lease entered into before12th July 1984 , and any lease entered into after11th July 1984 pursuant to an agreement made before12th July 1984 , this subsection shall have effect with the omission of the words from ‘and’ (where it first occurs) to ‘belong to him’.”
“(4) In the event of an election under subsection (3) above— (a) for the purpose of making allowances and charges under this Part, any machinery or plant which— (i) immediately before the time when the succession took place, belonged to the predecessor and was in use for the purposes of the trade; and (ii) immediately after that time, belonged to the successor and was in use for those purposes, shall (notwithstanding any actual sale or transfer) be treated as sold by the predecessor to the successor at a price which does not give rise to a balancing allowance or balancing charge; and (b) allowances and charges shall be made under this Part to or on the successor as if everything done to or by the predecessor had been done to or by the successor.” (a) for the purpose of making allowances and charges under this Part, any machinery or plant which— (i) immediately before the time when the succession took place, belonged to the predecessor and was in use for the purposes of the trade; and (ii) immediately after that time, belonged to the successor and was in use for those purposes, shall (notwithstanding any actual sale or transfer) be treated as sold by the predecessor to the successor at a price which does not give rise to a balancing allowance or balancing charge; and (b) allowances and charges shall be made under this Part to or on the successor as if everything done to or by the predecessor had been done to or by the successor.”
“Where a company begins or ceases to carry on a trade, or to be within the charge to corporation tax in respect of a trade, the company’s income shall be computed as if that were the commencement or, as the case may be, discontinuance of the trade, whether or not the trade is in fact commenced or discontinued.”
“Where, when the contribution was made, the trade for the purposes of which it was made was carried on or to be carried on by the contributor, the following provisions shall have effect on any transfer of the trade or any part of the trade— (a) where the transfer is of the whole trade, writing-down allowances for chargeable periods ending after the date of transfer shall be made to the transferee, and shall not be made to the transferor, (b) where the transfer is of part only of the trade, paragraph (a) above shall have effect with respect to so much of the allowance as is properly referable to the part of the trade transferred.” (a) where the transfer is of the whole trade, writing-down allowances for chargeable periods ending after the date of transfer shall be made to the transferee, and shall not be made to the transferor, (b) where the transfer is of part only of the trade, paragraph (a) above shall have effect with respect to so much of the allowance as is properly referable to the part of the trade transferred.”
“(1) Issue 1 - Whether s78 of CAA1990 [i.e. the 1990 Act] applied to deem IMSO to sell the Satellites to Inmarsat and, if so, with what effect. (2) Issue 2 - Whether IMSO incurred the launch costs ‘on the provision of … plant’ for the purposes of s61(4). (3) Issue 3 - Whether the other requirements of s61(4) of CAA1990 were satisfied so as to deem the Satellites to belong to IMSO as at15 April 1999 . That can be broken down into the following sub-issues: (a) Issue 3(a) – whether there was any ‘requirement’ of the Leases for IMSO to ‘provide’ the Satellites. (b) Issue 3(b) – whether the fact that IMSO incurred launch costs before the terms of the Leases commenced failed to satisfy the ‘chronological flow’ of s61(4). (c) Issue 3(c) – whether the ‘tailpiece' of s61(4) applied and, if so, with what consequence” (a) Issue 3(a) – whether there was any ‘requirement’ of the Leases for IMSO to ‘provide’ the Satellites. (b) Issue 3(b) – whether the fact that IMSO incurred launch costs before the terms of the Leases commenced failed to satisfy the ‘chronological flow’ of s61(4). (c) Issue 3(c) – whether the ‘tailpiece' of s61(4) applied and, if so, with what consequence”
“Given the fact that (as the parties agreed) the draftsman [of section 78(1) of the 1990 Act] assumed (without feeling it necessary to state explicitly) that the assets would have belonged to the predecessor before the succession, I consider that the same implicit assumption is made in respect of the successor, so that the provisions only apply where the assets in question actually belong (or, potentially, are deemed by some other provision to belong) to the successor after the succession.”
“It follows that since it is common ground the Satellites did not actually belong to Inmarsat after the succession on15 April 1999 , and I have been referred to no other provision which would confer on it a ‘deemed’ belonging of them, I do not consider s 78(1) operates in the way [counsel for Inmarsat] submits so as to confer entitlement to writing down allowances on Inmarsat based on the market value of the Satellites at the time of the succession on15 April 1999 .”
“I do not consider IMSO to have incurred capital expenditure (in the form of its costs of launching the Satellites) on the provision for the purposes of its trade of those Satellites and … accordingly s 61(4) cannot assist Inmarsat’s case, even if I am wrong about s 78(1) above.”
“I acknowledge [counsel for Inmarsat’s] argument that the Satellites were entirely useless for their intended purpose until they had been launched into orbit, however the question before me is whether IMSO incurred capital expenditure (in the form of the launch costs) ‘on the provision for the purposes of a trade carried on by [it] of machinery or plant…’. Here I agree essentially with [counsel for HMRC’s] argument. Any ‘provision of plant’ must have at its heart the plant itself; simply moving someone else’s plant from A to B (even if B is the place at which it is to operate in your trade, and however complex and expensive the process of movement may be) cannot in my view amount to the ‘provision’ of that plant. All the cases to which I was referred were concerned with ancillary costs associated with an acquisition (or, in the case of CIR v George Guthrie and Son (1952) 33 TC 327, a proposed acquisition) of the plant itself (or of the materials from which the plant was to be created), and none of them would have had in mind a situation such as the present.”
“One must remember … that the statutory language of s 61(4) refers to a lessee who ‘incurs capital expenditure on the provision… of machinery or plant which he is required to provide under the terms of the lease’. On the basis of the reasoning set out at [66] above, I do not consider that expenditure incurred on launch costs can, in a case such as the present, be equated to expenditure incurred ‘on the provision of’ the Satellites themselves. Therefore, in spite of the existence of a specific obligation, I do not consider the nature or subject matter of the obligation to be of the right sort to fall within s 61(4).”
“I cannot accept that a generalised obligation to comply with all relevant laws can be treated in the way Mr Prosser argues as giving rise to a specific obligation to incur expenditure on launching six specific satellites.”
“S 61(4) starts by referring to a ‘lessee’ incurring capital expenditure on the provision of machinery or plant, and it must be machinery or plant ‘which he is required to provide under the terms of the lease’. It seems to me that there is a natural chronological flow about this provision, which necessarily implies that the lease must be in existence before the capital expenditure is incurred. This view is reinforced by the fact that the draftsman has felt it necessary, in s 61(8), to extend the provision so as to apply where there is an agreement for lease (but only where the agreed term of the lease has already begun), rather than an immediately effective lease. If Mr Prosser’s argument were correct, this provision would effectively be unnecessary.”
“whilst I do not consider the arguments around the tailpiece to be potentially determinative of the proceedings in their own right, I do consider that they feed into the analysis of s 78(1) set out at [59] above in favour of [counsel for HMRC’s] view”
“we prefer HMRC’s interpretation of s78 to the effect that the section has no application in relation to a successor such as Inmarsat unless it becomes the actual owner of the relevant asset with s78 fixing, in such a case, the amount of expenditure on which the successor can claim plant and machinery allowances”
“The obvious objection to Inmarsat’s argument is that s78 says nothing express about whether the successor satisfies the ‘belonging’ requirement. Moreover, in deeming the transaction to be a ‘sale’ and in specifying the ‘net proceeds’ of that sale, s78 appears to be focusing on the disposal event to be brought in for the predecessor, rather than the tax treatment of the successor.”
“if IMSO had been the owner, rather than merely a lessee of the Satellites, we do not consider that there could be much doubt that the launch costs it incurred would have been ‘expenditure on the provision of’ the Satellites given the FTT’s finding that the Satellites were of no use whatsoever until they were launched into orbit”
“In effect that argument involves an assertion that IMSO’s status as a person who did not own the Satellites converted expenditure that would, if incurred by an owner, have been on the ‘provision’ of those Satellites into expenditure that was not on provision. That involves a focus on IMSO rather than on the nature of the expenditure, contrary to Lord Wilberforce’s approach as set out in Ben-Odeco [Ltd v Powlson[1978] 1 WLR 1093 ].”
“However, that is because such a person would not be able to satisfy the requirements of s24(1)(b), rather than because the expenditure is not on the provision of plant and machinery. That difficulty does not trouble Inmarsat in this case because, as Mr Prosser observed, if s61(4) applies, then the Satellites would be deemed to belong to IMSO.”
“the I-3 Satellites were ultimately launched under those contracts, so a point must have come at which it would have made no commercial sense for IMSO to decide not to launch. At that point, whenever it came, IMSO would have been in breach of Clause 7.03 [of the master lease agreement] if it had not launched the I-3 Satellites”
“Our conclusion on [Issue 2] means that expenditure incurred on launching the Satellites was expenditure on the ‘provision’ of those Satellites. It follows that the requirement imposed on IMSO to launch the Satellites was a requirement to ‘provide’ those Satellites.”
“100. … In our judgment, the focus in s61(4)(a) is on whether the necessary requirement ‘under the terms of the lease’ is present. The section does not make any express provision as to when that requirement must be honoured. As we have noted, it is not at all clear why Parliament wished to make special provision for persons required to provide plant and machinery under the terms of the lease. However, having done so it is not obvious why Parliament would have wished persons who incur expenditure before their lease has begun to be in a different position from persons who incur their expenditure afterwards. 101. We also agree with the interpretation of s61(8) that Inmarsat put forward. Parliament recognises that leases are often preceded by agreements for lease (particularly in the context of real estate transactions). Accordingly, an agreement for lease can be a source of a ‘requirement’ to provide plant and machinery as well as the lease itself. However if, a requirement is imposed in an agreement for lease but for whatever reason, no lease is ever granted, Parliament did not wish the obligation in the agreement for lease to count. That is achieved by providing that an agreement for lease is only within the scope of s61(8) where it culminates in the grant of an actual lease. Accordingly, in using the phrase ‘where the term covered by the lease has begun’, s61(8) is not emphasising the presence of any ‘temporal flow’. Rather, the word ‘where’ should be understood as meaning ‘in a situation where’.”
“There are useful but not conclusive dicta in reported authorities about the way in which, in general, statutory deeming provisions ought to be interpreted and applied. They are not conclusive because they may fairly be said to point in different directions, even if not actually contradictory. The relevant dicta are mainly collected in a summary by Lord Walker of Gestingthorpe JSC in DCC Holdings (UK) Ltd v Revenue and Customs Comrs[2011] 1 WLR 44 , paras 37–39, collected from Inland Revenue Comrs v Metrolands (Property Finance) Ltd[1981] 1 WLR 637 , Marshall v Kerr[1995] 1 AC 148 and Jenks v Dickinson[1997] STC 853 . They include the following guidance, which has remained consistent over many years: (1) The extent of the fiction created by a deeming provision is primarily a matter of construction of the statute in which it appears. (2) For that purpose the court should ascertain, if it can, the purposes for which and the persons between whom the statutory fiction is to be resorted to, and then apply the deeming provision that far, but not where it would produce effects clearly outside those purposes. (3) But those purposes may be difficult to ascertain, and Parliament may not find it easy to prescribe with precision the intended limits of the artificial assumption which the deeming provision requires to be made. (4) A deeming provision should not be applied so far as to produce unjust, absurd or anomalous results, unless the court is compelled to do so by clear language. (5) But the court should not shrink from applying the fiction created by the deeming provision to the consequences which would inevitably flow from the fiction being real. As Lord Asquith memorably put it in East End Dwellings Co Ltd v Finsbury Borough Council[1952] AC 109 , 133: ‘The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.’” ‘The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.’”
“54. In this regard, we consider that HMRC are correct to emphasise the point that, if s78(1) were intended to establish a deemed ‘belonging’ of plant and machinery, in the absence of a real ‘belonging’, it might have been expected to deal with further matters such as when the deemed belonging comes to an end and what is to happen when it does. Yet s78 does not address such points. That is in contrast with other provisions that deem machinery to belong to someone other than the real owner. For example, the tailpiece to s61(4) prescribes what is to happen when the relevant lease is terminated. The ‘contributions’ code in s154 and s155 of CAA1990 treats a person who contributes to another’s capital expenditure on plant and machinery as having an entitlement to allowances and as satisfying the ‘belonging’ condition. That code stipulates, in s155(3) what is to happen on a transfer of the contributor’s trade. 55. Inmarsat argues that it is not necessary for s78 to deal with the future since the ordinary provisions set out in s24 and s26 of CAA1990 can apply to the deemed belonging established by s78. We do not accept that submission. To take an obvious example, suppose that after the Succession, Inmarsat had sold its entire business for market value in cash. The scheme of the legislation would suggest that Inmarsat should not be entitled to continue to claim capital allowances on the Satellites. But it is not straightforward to derive that result from the provisions of s24 and s26. Even the conclusion that there is a disposal event under s24(c)(i) of CAA1990 on the grounds that the Satellites ‘ceased to belong’ to Inmarsat would not be entirely secure as Inmarsat’s ownership would only be deemed to exist for tax purposes and it is not obvious how Inmarsat’s sale of its ‘actual’ assets would necessarily bring to an end its ownership of deemed assets. Moreover, there would be difficulties in fixing the amount of disposal value to be brought into account. Logic suggests that the disposal value should be calculated by reference to deemed market value (since Inmarsat, not having actually sold the Satellites, could not attribute any part of the actual purchase price received to the Satellites). But if the ‘real’ sale was at market value, Inmarsat’s disposal value would be fixed by s26(1)(a) by reference to proceeds that it actually receives. If none of the actual proceeds are referable to the Satellites, it is not obvious to see how the legislation could produce a sensible disposal value in relation to the Satellites.”
“Where a lessee incurs capital expenditure on the provision for the purposes of a trade carried on by him of machinery or plant which he is required to provide under the terms of the lease, the machinery or plant shall be treated for the purposes of this Chapter as belonging to him for so long as it continues to be used for the purposes of the trade; but, as from the determination of the lease, section 44(5) above shall have effect as if the capital expenditure on providing the machinery or plant had been incurred by the lessor and not by the lessee.”
“the provision … of … plant”
“So the question is whether, if the dock is plant, the cost of making room for it is expenditure on the provision of the plant for the purposes of the trade of the dock owner. In my view, this can include more than the cost of the plant itself because plant cannot be said to have been provided for the purposes of the trade until it is installed: until then it is of no use for the purposes of the trade. This plant, the dock, could not even be made until the necessary excavating had been done. All the commissioners say in refusing this part of the claim is that this expenditure was too remote from the provision of the dry dock. There, I think, they misdirected themselves. If the cost of the provision of plant can include more than the cost of the plant itself, I do not see how expenditure, which must be incurred before the plant can be provided, can be too remote.”
“It only remains to deal with the second point raised by the appellants. This is that even if the concrete work were ‘plant’ the cost of excavation did not qualify under Chapter II. The commissioners upheld the contention of the revenue upon this point, their view being that the expenditure was ‘too remote’ from the provision of the dry dock. In my view, they were wrong in excluding this expenditure. The excavation was a necessary preliminary to the construction of the dry dock and, in my view, was covered by the provision of plant under section 279. ‘Provision’ must cover something more than the actual supply. In this case it includes the excavation of the hole in which the concrete is laid.”
“The expression ‘capital cost to the taxpayer’ makes it easier to include within deductible expenditure costs which the particular taxpayer incurs, whereas the U.K. words, more objectively, focus on expenditure directly related to the plant. The one draws a line round the taxpayer and the plant; the other confines the limiting curve to the plant itself.”
“An important principle of the laws of taxation is that, in the absence of clear contrary direction, taxpayers in, objectively, similar situations should receive similar tax treatment. The taxpayer’s argument in the present case does not bring this about. On the contrary a different result would follow according as he pays for the provision of plant out of his own resources, or borrows it. In the latter case he would get an allowance, in the former he would not — this may amount to treating an investor worse than a speculator. Moreover, on the same argument, a different allowance in respect of identical plant would result according as he (i) borrows from a bank, (ii) raises money by a public issue of debentures, (iii) obtains money from his shareholders. And, again, a different result would follow according as (i) he is able to capitalise the interest on the money borrowed or (ii) (because he is carrying on a profit-making trade or for other reasons) does not or cannot capitalise it. If the law is such that it offers the taxpayer these options, he is of course entitled to select that which suits him best, but an interpretation which introduces such a large element of subjectivity is to be avoided. The words ‘expenditure on the provision of’ do not appear to me to be designed for this purpose. They focus attention on the plant and the expenditure on the plant — not limiting it necessarily to the bare purchase price, but including such items as transport and installation, in any event not extending to expenditure more remote in purpose. In the end the issue remains whether it is correct to say that the interest and commitment fees were expenditure on the provision of money to be used on the provision of plant, but not expenditure on the provision of plant and so not within the subsection. This was the brief but clear opinion of the special commissioners and of the judge and little more is possible than after reflection to express agreement or disagreement. For me, only agreement is possible.”
“In my view the question to be asked is, what is the effect of particular capital expenditure? Is it the provision of finance to the taxpayer, or is it the provision of plant to the taxpayer? In my opinion the effect of the expenditure was the provision of finance and not the provision of plant. I would add that I do not seek to confine qualifying capital expenditure to the price paid to the supplier of the plant. I should have thought, for example, that if the cost of transport from the supplier to the place of user is directly borne by the taxpayer it would be expenditure on the provision of plant for the purposes of the taxpayer’s trade. And there may well be other examples of expenditure, additional to the price paid to the supplier, which would qualify on similar grounds. But such matters are not for decision in this appeal.”
“(1) As we have noted, no ‘division of ownership’ is needed to make s61(4) workable, at least insofar as the obtaining of allowances prior to a disposal event is concerned. It is quite straightforward to interpret s61(4) as enabling a lessee to claim allowances on the expenditure it has incurred on the ‘provision’ of the asset (with the assistance of a deemed satisfaction of the belonging condition) and for the lessor, if it is also the actual owner of the asset, to claim allowances on any expenditure it has incurred on provision. (2) We agree with HMRC that matters become much more complicated on a disposal of the asset. If there is a sale of the asset, for example and both lessor and lessee have been claiming allowances on the expenditure that they have respectively incurred, s61(4) contains no mechanism spelling out the effect of that sale. In such a case, the lessor being the ‘real owner’ would no doubt receive the ‘real’ disposal proceeds, but s61(4) leaves unanswered the question whether the lessor would need to bring into account the entirety of the resulting disposal value, or whether some of the disposal proceeds should be treated as received by the lessee, so as to result in the lessee bringing into account a disposal value as well. Still less does the legislation contain any mechanism for apportioning the disposal values. (3) We acknowledge that, conceptually, this lacuna in the legislation might indicate that Parliament did not intend s61(4) to result in a ‘division of ownership’. But the force of that point is significantly diminished by the fact that a similar lacuna exists in the ‘contributions code’ contained in s154 and s155 CAA1990 which quite clearly is intended to result in a division of deemed ownership. HMRC and Inmarsat put forward different analyses of how the lacuna might be resolved in the context of s154 and s155 by reference to the situation where a contributor, C, contributes 50 to a recipient, R, who acquires plant and machinery for 100 with the plant and machinery subsequently being sold for 50, or C subsequently ceasing to trade. We do not need to determine which party’s analysis of these various situations was correct. The fact that neither s154 nor s155 offered any guidance as to how relatively straightforward situations as this should be analysed suggests to us that the capital allowances code contains at least one other instance where the consequences of deemed co-ownership are not fully spelled out. It follows that we attach little weight to HMRC’s argument to the effect that the presence of this lacuna in s61(4) indicates that Parliament cannot have intended it to result in deemed co-ownership of an asset. (4) Moreover, once it is accepted that s61(4) applies to leases of chattels, it is difficult to think of a real-world situation where s61(4) would wish to treat the lessee’s ownership as being exclusive. Of course, if the lessee incurred all of the expenditure on provision of the asset, it might make sense for the lessee alone to be treated as the owner. But it is difficult to see how such a situation could ever come within s61(4) since it is not obvious why a person who has provided all of the expenditure on the asset would then agree to lease it from another.”
“required to provide under the terms of the lease”
“the Lessee [i.e. IMSO] shall, by notice to the Owner [i.e. Abbey], thereupon immediately terminate the Owner’s obligation to purchase that [satellite] and lease that [satellite] to the Lessee with effect from that date and, if it fails so to terminate, the Owner shall, at any time after 31st December, 1998, be entitled so to terminate, and following termination pursuant to this Clause 9.05(a) the procedure described in Clause 9.02(2) shall apply”
“The Lessee [i.e. IMSO] shall have and maintain all permits, licences and approvals required under any Pertinent Laws and shall satisfy the requirements of all Pertinent Laws.”
“Purpose (1) The purpose of the Organization [i.e. IMSO] is to make provision for the space segment necessary for improving maritime communications and, as practicable, aeronautical communications, thereby assisting in improving communications for distress and safety of life, communications for air traffic services, the efficiency and management of ships and aircraft, maritime and aeronautical public correspondence services and radiodetermination capabilities. (2) The Organization shall seek to serve all areas where there is need for maritime and aeronautical communications. (3) The Organization shall act exclusively for peaceful purposes”; and ii) As article 5: “Operational and Financial Principles of the Organization (1) The Organization shall be financed by the contributions of Signatories. Each Signatory shall have a financial interest in the Organization in proportion to its investment share which shall be determined in accordance with the Operating Agreement. (2) Each Signatory shall contribute to the capital requirements of the Organization and shall receive capital repayment and compensation for use of capital in accordance with the Operating Agreement. (3) The Organization shall operate on a sound economic and financial basis having regard to accepted financial principles.”
“chronological flow”