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The taxpayer was a member of a group of companies but not a member of the VAT group. The companies' business was insurance and the taxpayer acquired specific goods from third parties which were needed by two other group members CARC and CML.
CARC and CML's respective business consisted of the exempt supply of insurance to the extent that if they were to purchase the goods an input tax recovery of less than 1% would have arisen. The taxpayer however was not an exempt trader and so could deduct input tax.
Under a VAT planning scheme the taxpayer would acquire the goods and using a complex arrangement involving the leasing of goods over a ten-year period spread the irrecoverable VAT cost of the life of the leases.
HMRC decided that the main aim of the scheme was to obtain a tax...
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