Litigator's View

An appeal heading for the Lords involves a battle over the tax status of money paid in order to release land from restrictive covenants so that it can be sold. Leave has been given for Pounds Shipowners and Shipbreakers to challenge the Inland Revenue's stance over the sale of land at Portsmouth. The land was sold for u399,750 but Pounds first had to pay u90,000 to obtain its release from restrictive covenants. After the sale, Pounds claimed the u90,000 was tax-deductible. The tax commissioners and the High Court agreed, but the Court of Appeal shared the view of the Inland Revenue that the sum was not deductible. It ruled that it was impossible to describe the u90,000 as an expense incurred by the taxpayer in granting the option to purchase.