Mobile software

Company M had devised software for mobile phones. In a scheme to provide rollout finance four limited liability partnerships were created which would purchase an interest in the software. Based on projected income figures the software was valued at £192 million and the interest was purportedly sold for £143 million although other valuations suggested that there could be a negative valuation or a value of £65 million. 75% of the purchase price of the software was funded by interest-free 'non-recourse loans' which were indirectly made available and underwritten by the vendor of the software who provided the security and funding in respect of them. The net effect would be that the loans would be written off after ten years. The LLPs claimed 100% first year capital allowances on the full price referring to CAA 2001 s 5.

The Revenue rejected the claims...