Unallowable purpose rule applied to deny deductions on intra-group lending.
In Syngenta Holdings Ltd v HMRC [2024] UKFTT 998 (TC) (1 November) the First-tier Tribunal (FTT) dismissed Syngenta Holdings Ltd’s (SHL) appeal against closure notices denying corporation tax deductions for loan interest on the basis that SHL was party to the loan for an unallowable purpose.
The context was that SHL acquired the entire issued share capital of its sister company Syngenta Ltd (SL) from its immediate parent company Syngenta Alpha BV (SABV). In exchange SHL issued shares and paid cash to SABV. The US$950m cash element of the consideration was funded by the loan in question (setting the debt at the maximum level the group realistically thought HMRC would permit). The lender was a Dutch group treasury company.
HMRC argued that those designing the arrangements understood the predominant reason why...
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Unallowable purpose rule applied to deny deductions on intra-group lending.
In Syngenta Holdings Ltd v HMRC [2024] UKFTT 998 (TC) (1 November) the First-tier Tribunal (FTT) dismissed Syngenta Holdings Ltd’s (SHL) appeal against closure notices denying corporation tax deductions for loan interest on the basis that SHL was party to the loan for an unallowable purpose.
The context was that SHL acquired the entire issued share capital of its sister company Syngenta Ltd (SL) from its immediate parent company Syngenta Alpha BV (SABV). In exchange SHL issued shares and paid cash to SABV. The US$950m cash element of the consideration was funded by the loan in question (setting the debt at the maximum level the group realistically thought HMRC would permit). The lender was a Dutch group treasury company.
HMRC argued that those designing the arrangements understood the predominant reason why...
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