In this podcast, Zoe Andrews and Tanja Velling discuss two Court of Appeal decisions on the loan relationships unallowable purpose rule in section 441 of the Corporation Tax Act 2009: BlackRock and Kwik-Fit. In both cases, the Court of Appeal confirmed the Upper Tribunal’s decision that there was an unallowable tax avoidance purpose. In BlackRock, this led to a complete disallowance of all interest deductions whereas, in Kwik-Fit, the deductions could be partly attributed to the taxpayers’ commercial purpose and consequently allowed. The podcast draws out key lessons.
Zoe and Tanja also discuss the Court of Appeal’s welcome clarification, in Hargreaves Property Holdings, that the exemption from withholding tax for interest to which a UK-resident company is beneficially entitled is not automatically lost merely because the company on-pays the interest. The podcast further covers changes to HMRC guidance, including on the exemption from the 1.5% stamp taxes charge, clearances in respect of the purpose test in the capital gains tax reorganisation rules and the post-Brexit interpretation of VAT and excise law, as well as international tax developments at the OECD and UN.
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