In Stagecoach Group and Stagecoach Holdings v HMRC [2016] UKFTT 120 the FTT found that no loan relationship had been created so that no debits were allowable.
These two lead appeals related to a scheme for the recapitalisation of two companies Stagecoach Holdings (Holdings) (the second appellant) and Stagecoach Services (Services) by their ultimate parent Stagecoach Group (Group) (the first appellant). The scheme for recapitalisation was by means of forward subscription agreements (FSAs) between Group and Holdings and Group and Services. The FSAs provided that Group’s funding would be calculated largely by reference to sums to be paid by another subsidiary Stagecoach Transport Holdings (Transport) in repayment of a pre-existing loan to it from Group. In exchange for the funding by Group Holdings and Services agreed to issue ordinary shares to their immediate parent companies.
HMRC contended that the debit relied upon...
