Kwik-Fit Group Limited & Ors v The Commissioners for HMRC

Unallowable purpose rule in s.441 CTA 2009: Loan relationships debits are disallowed if attributable to a purpose not amongst the company's business or commercial purposes. A tax avoidance purpose is unallowable if it is the main or one of the main purposes.

Corporation Tax Act 2009, sections 441 and 442

Tax advantage (s.1139 CTA 2010): Includes relief from, repayment of, or avoidance/reduction of tax.

Corporation Tax Act 2010, section 1139

Transfer pricing rules (Part 4 TIOPA): Tax calculations should be based on arm's length provisions. If actual provision confers a potential tax advantage, profits/losses are recalculated as if arm's length provision was used.

Taxation (International and Other Provisions) Act 2010, sections 147, 148, 152, 155, 174

Interaction between transfer pricing and loan relationships: Amounts imputed under transfer pricing rules are treated the same as actual profits, losses, or interest under Part 5 CTA 2009.

Corporation Tax Act 2009, section 446

Determining unallowable purpose: Focuses on the company's subjective purposes; considers the intentions of relevant decision-makers (typically the board). Effects, even if inevitable, are not necessarily purposes; however, some consequences are so inextricably involved they must be a purpose.

BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 and Travel Document Service v HMRC [2018] EWCA Civ 549

Tax advantage in Sema: A better position vis-à-vis the Revenue, covering situations where liability is reduced or a payment is due from the Revenue.

IRC v Sema Group Pension Scheme Trustees [2002] EWCA Civ 1857

Just and reasonable apportionment (s.441(3) CTA 2009): Objective exercise based on relevant purposes; fact-specific.

BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330