The Court of Appeal accepted that certain disputed expenses were expenses of management, but ruled in HMRC’s favour on the basis that the expenditure was capital in nature and that it was therefore taken out of the management expenses regime by virtue of CTA 2009, s. 1219(3)(a):
“In my judgement, the UT fell into error … because they considered that the test for expenses of management and the capital expenditure test are similar. Accordingly, they considered that expenses of management are likely to be revenue expenses. I respectfully disagree. As I have explained when setting out the correct statutory interpretation of section 1219(3)(a) of the CTA 2009, in my view the clear intention of Parliament was to carve out of the expenses of management regime those expenses which are capital in nature by reference to the well established principles which have been developed by the courts on that distinct legal question over the course of the last century.”