FC Shipping Limited & Anor v The Commissioners for HMRC
Decision date: 6 November 2024
Neutral citation: [2024] UKFTT 1013 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This tax appeal asked whether paragraph 90 Schedule 22 (defeased leasing) prevented two companies claiming capital allowances on five ships because de‑risking provisions removed the greater part of non‑compliance risk. The Tribunal held that the relevant "lease" for paragraphs 89–90 included both the head‑leases and sub‑leases, that the Fortis Bank guarantee was not an excepted form of security under paragraph 91, and that the combination of the intermediate lessee (Fortis Finance) and the bank guarantee removed the greater part of the non‑compliance risk, so the appeals were dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The Tribunal treated the paragraph 89 "lease" as a composite of interrelated arrangements (head‑lease plus sub‑lease) and measured non‑compliance risk against that composite; permitted excepted securities under paragraph 91 are to be identified and excluded from the list of other provisions considered, but a guarantee that functionally operates as security is not automatically an excepted security and may be disregarded only if it does not remove the greater part of the risk under paragraph 90. Applying that approach, the specific intermediate lessor structure together with the bank guarantee removed the greater part of non‑compliance risk and engaged paragraph 90.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment notes (non‑binding) observations on measurement and methodology: expert approaches (probability of default versus probability‑weighted loss; subtraction v division) can produce different numerical measures of "non‑compliance risk" and the statutory inquiry requires contextual assessment of risk as defined in the Schedule; and guarantees may be treated as security for paragraph 91 when they functionally operate as such despite being personal obligations.