Tax and the City briefing for April 2018

Unallowable purpose rule applies to disallow all debits

The Court of Appeal in Travel Document Service and another v HMRC [2018] EWCA Civ 549 unanimously dismissed the appeals of Travel Document Services (TDS) and Ladbroke Group International (LGI). The case concerns a tax avoidance scheme notified under DOTAS. The transactions took place in 2008 the essence of which were to exploit a perceived loophole in the FA 1996 loan relationships rules as they were at the time. The scheme involved TDS bringing a holding of LGI’s shares within the loan relationships rules by entering into a total return swap (the Swap) in relation to them then depressing the value of the shares by novating a large loan liability into LGI from another group company. On the basis of the...