No joy for JTIAC: an extension of the unallowable purpose principle

The appeal in JTI Acquisition Company (2011) Ltd is the last in a trilogy of recent cases concerning the application of CTA 2009 ss 441 and 442, (the ‘unallowable purpose’ rules in the loan relationships code) to pass before the Court of Appeal. The previous decisions of the Court of Appeal, particularly BlackRock, served to highlight the various errors of law made by the tribunals below in deciding these cases, notwithstanding that those appeals ultimately failed on their specific facts. It was thought by many practitioners that JTIAC might present an opportunity for the Court of Appeal to set out the limits of the application of the unallowable purpose rule. Instead, the court has seemingly extended its ambit yet further, and implicitly endorsed findings which, in the author’s view, were not open to the First-tier Tribunal to make as a matter of law.