Mike Lane and Zoe Andrews (Slaughter and May) provide your monthly update on tax developments affecting the City.
UnionCastle: not an allowable loss
In Union Castle Mail Steamship Company Ltd v HMRC [2020] EWCA Civ 547 the Court of Appeal considered whether an accounting debit linked to the derecognition of derivative contracts was a loss for the purposes of corporation tax under FA 2002 Sch 26 now rewritten in CTA 2009. The derecognition of the derivatives was triggered by the issue of bonus shares carrying dividend rights which entitled the shareholder to 95% of the economic benefit of the derivative contracts. This structure was chosen because the shareholder did not wish to invest in derivatives itself for fear of prejudicing its investment trust status and so its subsidiary Union Castle entered into the contracts instead.
The First-tier Tribunal...
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Mike Lane and Zoe Andrews (Slaughter and May) provide your monthly update on tax developments affecting the City.
UnionCastle: not an allowable loss
In Union Castle Mail Steamship Company Ltd v HMRC [2020] EWCA Civ 547 the Court of Appeal considered whether an accounting debit linked to the derecognition of derivative contracts was a loss for the purposes of corporation tax under FA 2002 Sch 26 now rewritten in CTA 2009. The derecognition of the derivatives was triggered by the issue of bonus shares carrying dividend rights which entitled the shareholder to 95% of the economic benefit of the derivative contracts. This structure was chosen because the shareholder did not wish to invest in derivatives itself for fear of prejudicing its investment trust status and so its subsidiary Union Castle entered into the contracts instead.
The First-tier Tribunal...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
