Cadbury Schweppes Plc & Anor v HM Inspector of Taxes, Court of Appeal - Chancery Division, July 21, 2005, [2005] EWHC 1610 (Ch)
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Cadbury Schweppes Plc & Anor v HM Inspector of Taxes, Court of Appeal - Chancery Division, July 21, 2005, [2005] EWHC 1610 (Ch)
Neutral Citation Number: [2005] EWHC 1610 (Ch)
Case No: CH/2004/APP/0872IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONRoyal Courts of JusticeStrand, London, WC2A 2LLDate: 21 July 2005 Before :MR JUSTICE ETHERTON- - - - - - - - - - - - - - - - - - - - -Between :- - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -Mr Julian Ghosh (instructed by Cadbury Schweppes Plc) for the ClaimantsMs Ingrid Simler (instructed by HM Revenue & Customs) for the Defendants Hearing dates: 14,15 June 2005- - - - - - - - - - - - - - - - - - - - -JudgmentMr Justice Etherton : Introduction1. This is an appeal by Cadbury Schweppes Plc (``CS plc'') and Cadbury Schweppes Overseas Limited (``CSOL'') (together ``the Appellants'') against a decision (``the Decision'') of the Special Commissioners (Dr A. N. Brice and Mr Malcolm J. F. Palmer) (``the Commissioners'') on 5 November 2004 dismissing an appeal against a notice of determination under the Taxes Management Act 1970 s.41A in relation to CS plc and a notice of assessment to corporation tax dated 21 November 2001 in respect of CSOL for the year ending 31 December 1995.2. CS plc and CSOL appealed the notice of determination and the notice of assessment respectively on the ground that the Inland Revenue was incorrect in the extent to which it regarded the receipts from transfers of six loan notes issued on 15 September 1994 by Cadbury Schweppes Finance Limited (``the Notes'') as income rather than capital.3. The appeal turns on the proper meaning and effect of the tax avoidance provisions in Chapter II of Part XVII of the Income and Corporation Taxes Act 1988 (``TA 1988''), and, in particular, TA 1988 s.717.The relevant facts4. The Commissioners, in a clear and careful decision, set out the relevant facts, which were not in dispute, as follows.``11. Prior to the transactions the subject of the appeal the Appellants received a prospectus from a merchant bank about what was called an ``accrued income scheme''. The prospectus stated that the merchant bank had developed a proprietary inter-company loan instrument which had an unusual payment profile. If the First Appellant were to invest £100M in a bond, and then to dispose of it after eleven months, it would realise a capital gain of £5.5M which the First Appellant could shelter by using capital losses within the group. The new structure involved the issue of a bond with an uneven paym...See the full content of this document
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