Yandina appeal fails to fly

A TAX-HAVEN-BASED company which owes Inland Revenue $30 million has had a $22m legal claim against three big banks relating to a lease agreement which ended over 15 years ago dismissed by the Court of Appeal.

Yandina Investments recently appealed a High Court decision which struck out its claim to $22m that it said it was owed as part of a lease agreement involving an Air NZ aircraft and three of New Zealand’s biggest banks.

The claim related to the interpretation of the deeds of assignment the British investor had with ANZ, BNZ and Westpac.

In 1982 the banks, together with the now defunct DFC, combined to buy a Boeing 747 which was in turn leased to Air New Zealand.

Under the structure of the lease, the partnership earned little or no taxable income in the early years, but tax would become payable in the later years.

In 1995 a new partnership was formed in which Yandina was the 99.99 per cent non-active partner.

Yandina was ultimately controlled by Ridgley Enterprises, which is registered to the British tax haven island of Jersey.

When the partnership began earning taxable income between 1995 and 1997, the banks temporarily handed over their interest in the aircraft-leasing partnership to Yandina.

Yandina was able to use its own tax losses to offset the taxable income from the lease.

Over the next three years Air New Zealand paid $23m in rental for the 747 to the banks, which was passed on to Yandina.

The banks also earned other income from the lease, including depreciation tax deductions.

But in a statement of claim filed in December, 2010, Yandina said the banks had failed to pay all money due to it under the deeds.

Justice Lynton Stevens noted in his judgment that Yandina had unsuccessfully tried to involve the banks in proceedings against IRD. The appeal was dismissed.