BCM Cayman LP and another v HMRC

In BCM Cayman LP and another v HMRC [2023] EWCA Civ 1179 (12 October 2023) the Court of Appeal (CA) dismissed the taxpayers’ appeals against the decisions of the Upper Tribunal (UT) and First-tier Tribunal (FTT) regarding (i) the tax treatment of tiered limited partnerships and (ii) the deductibility of loans incurred to invest in a partnership.  

Bluecrest Capital Management LP (BCM LP) was a limited partnership undertaking a trade of investment management. In 2007 a Cayman Islands company (BCMCL) took out a loan from a lender in order to acquire some of the limited partnership interests in BCM LP. BCMCL then contributed those partnership interests to a Cayman Islands limited partnership (Cayman LP).  As a result Cayman LP became a partner in BCM LP. BCMCL became the general partner of Cayman LP and the Lender became a corporate limited...