The Brain Disorders Research Limited Partnership v HMRC

In The Brain Disorders Research Limited Partnership v HMRC [2018] EWCA Civ 2348 (31 October 2018) the Court of Appeal found that a partnership set up as part of a scheme to generate substantial capital allowances (as well as interest deductions) was not trading.

The Brain Disorders Research Limited Partnership (‘the Partnership’) was established as part of a scheme promoted by Matrix and designed with the objectives of claiming substantial capital allowances on medical research and of obtaining tax relief for the members of the Partnership in respect of pre-payments of interest included as part of the financing structure of the scheme. The limited partners of the Partnership were all high net worth individuals who joined the scheme in order to obtain up-front tax relief which could be set against their other sources of income. In order to maximise the claim for capital allowances whilst...