BIM40060 - Receipts: general: particular types
of transaction
Guidance in the context of particular types of transaction may
be found at
BIM40100 onwards (compensation and
damages),
BIM40300 onwards (exclusivity
agreements),
BIM40450 onwards (grants), BIM40851
(know-how) and
BIM41050 onwards (reverse premiums). The
case law highlights certain characteristics that may apply
generally; for instance:
- It is important not to be guided too much
by the label attached to the receipt. What is important is to
establish what in fact the receipt was actually for (see Walton J
in Burman v Thorn Domestic Appliances (Electrical) Ltd [1981]
55TC493 at 507I).
- In determining the true character, all the
surrounding circumstances should be considered. In particular, it
may also be necessary to have regard to extrinsic evidence (see
Megarry J in CIR v Church Commissioners for England [1976] 50TC516
at 538).
- There is no single touchstone that
determines whether a receipt is capital or revenue. But to have the
character of capital, receipts should derive from the loss or
disposal of tangible capital assets of the trade, or intangible
assets of a capital nature (for detailed guidance on intangible
assets see
BIM35500 onwards). Receipts arising from
the loss or disposal of trade agreements will be revenue except in
exceptional cases where their loss cripples the whole trade (see
Van den Berghs Ltd v Clark [1935] 19TC390 and, on the payments
side, Vodafone Cellular Ltd & Others v Shaw [1997] 69TC376,
discussed in
BIM42140).
- If appropriate, a receipt may be
apportioned, part to capital and part to revenue.
