Jurisdiction(s):
United Kingdom

FTT clarifies CTA 2009 s 327: commercial reality governs referability of pre-migration loan relationship losses; redemption expenses are losses (UK Care No 1 Ltd v HMRC)

Published on: 27 August 2024

Published by a LexisNexis Tax expert

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Article summary

UK Care No 1 Ltd v HMRC [2024] UKFTT 542 (TC)

What are the practical implications of this case?

The circumstances of this dispute are atypical and, at first blush, one might assume the outcome has significance only where closely aligned facts present themselves. Even so, as the judge pointed out, there have been no decided cases addressing CTA 2009, s 327, nor its antecedent provision, and therefore the ruling will attract attention from practitioners operating under this legislation more generally. Moreover, the decision articulates overarching principles on the manner in which a Tribunal or a court may approach construing the provision, with particular emphasis on the commercial reality of the losses in question. Commercial reality is invariably an evidential issue, yet the judgment reinforces the need to evaluate in a disciplined way how that commercial reality is to be shown when one is interpreting this provision, and how the evidential record can adequately, effectively and appropriately support that analysis in practical application.

What was the background?

The appellant is a Guernsey-incorporated entity which served as insurer in respect of certain loan notes that were secured over the UK care home business within the corporate group headed by BUPA...

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