In JTI Acquisitions Company (2011) Ltd v HMRC [2023] UKUT 194 (TCC) (7 August 2023) the Upper Tribunal (UT) dismissed the taxpayer’s appeal against the First-tier Tax Tribunal (FTT) decision that the unallowable purpose rules applied such that all of the loan relationship debits in respect of the interest paid should be denied.
The taxpayer a UK company and part of a US-headquartered multinational group sought to apply debits in respect of the arm’s length interest it paid on an intra-group US$550m loan (which was used to part-fund the acquisition of another US-based corporate group).
HMRC had denied the debits on the basis of the unallowable purpose rules in of CTA 2009 s 441 and s 442). Where the rules apply the deduction of loan interest by the loan debtor that would otherwise arise is denied but only insofar as it is attributable to the unallowable...
