Tax case

Dextra loses

The House of Lords has confirmed the Court of Appeal's decision in favour of the Revenue in MacDonald v Dextra. The taxpayer companies were members of a group which traded in mobile telephones. An employee benefit trust was set up by a deed on 18 December 1998 by a group company as settlor and a Jersey company as trustee. On 21 December the companies paid £2.75 million to the trustees to be held in the trust. The trustees could use the funds to pay emoluments to employees and could also make payments which were not emoluments for example in the form of loans which is what they did during 1999.
It was undisputed that on ordinary accounting principles the £2.75 million was deductible in computing the profits of the companies for the year ended 31 December 1998. However the Revenue...