There's talk here of 'tax avoidance' and 'tax loopholes' regarding Sprite motorcycles, but I think what was going on was a legitimate way of lowering taxation.
In the UK 'Purchase Tax' was introduced in 1940. It was a complicated system with exceptions, differing rates, 'luxury goods' and almost constant governmental tinkering. But if you make things complicated, it leaves lots of room for ducking and diving: a car attracted higher Purchase Tax than a van for instance, but buy a van, cut some holes in the sides, stick in some windows, put a bench seat inside and you got a sort of a car at the cost of a van. Companies soon sprang up to cater for this dodge. Similarly, a heap of parts that could be bolted together to make a car was classed by the tax authorities as 'components' and attracted a negligible rate of Purchase Tax - the reasoning being that these components could be assembled into cars by British labour and exported at a competitive price. Smaller 'kit car' manufacturers latched on to this and the first Lotus car available to the general public was the Lotus Seven - in kit form.
This applied to motorcycles too, a 'bitsa' motor bike would sell at something like 12% - 15% below the cost of an assembled one - well worth getting your hands dirty bolting in the motor and putting the wheels on.
This came to an end in 1973 when the UK introduced VAT - Value Added Tax, an across-the-board tax with few exceptions. Whilst there was general buggering-about with this tax too, one thing that disappeared at a stroke was the lower tax rate for so-called 'components'. Whilst kit cars continued to be sold, often with customers sourcing their own engines, the big tax advantage had gone. So, was 1973 the beginning of the end for Sprite Developments? If so, it wouldn't be 'tax avoidance' or even a 'tax loophole', but the end of a legitimate application of Purchase Tax which had given Sprite a price advantage.
