The Upper Tribunal’s recent decision in JTI Acquisition Company (2011) Limited v Commissioners for HMRC ([2023] UKUT 00194 (TCC)), which concerned the loan relationship ‘unallowable purpose’ rule, has important implications.
In particular, it impacts on whether borrowing for genuine commercial purpose can prevent the unallowable purpose rule applying, whether a ‘group purpose’ can constitute a ‘main purpose’, and in relation to whether a company being party to a loan relationship can be taken as a ‘given’ (see Norfolk and Montagu on the Taxation of Interest and Debt Finance, 7.2542G-H, 7.2548, 15.29C and 15.51B).
The Upper Tribunal’s decision will, of course, be addressed in the next (November 2023) update of Norfolk and Montagu on the Taxation of Interest and Debt Finance.
Prior to the publication of this Update, subscribers may find the following article, written by Gerald Montagu, helpful:
