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Two partnerships were set up to acquire rights in elements of a software package and to exploit them. The investors only put up 25% of the money themselves the other 75% was provided by non-recourse finance.
In economic terms only the money put up by the investors was used to finance the software development the rest of the money was used to provide an indirect security for the repayment of the borrowing.
The Supreme Court upheld in part the original decision of the Special Commissioner that only the 25% of the funds provided by the investors had actually been expended on purchasing the software.
The judges looked at the principles of both Barclays Mercantile Business Finance [2005] STC 1 and Ensign Tankers [1992] STC 226 holding that both were still valid law. A...
