The Upper Tribunal upheld the First Tier Tribunal’s (FTT) decision and ruled against HMRC’s appeal that a balancing charge of £12.5m was payable on the disposal of a boat by shipping company Unicorn Tankship. HMRC argued this in its closure notice amending the shipping company’s corporation tax return.

Unicorn Tankship had been subject to the tonnage tax regime and while in the regime, Unicorn Tankship could not benefit from capital allowances deductions. After leaving the regime, as a result of ceasing to be a qualifying company, the company disposed of a ship.