JTI Acquisition Company (2011) Limited v The Commissioners for HMRC
[2024] EWCA Civ 652
Syngenta Holdings Limited v The Commissioners for HMRC
1 November 2024
[2024] UKFTT 998 (TC)
First-tier Tribunal
A big company bought another using a loan. The taxman said the loan was mainly to avoid taxes, not for a real business reason. The judge agreed after looking at lots of emails and documents, and said the company couldn't deduct the loan interest from its taxes.
Key Facts
- •Syngenta Holdings Limited (SHL) acquired Syngenta Limited (SL) in 2011, funding part of the acquisition with a loan from Syngenta Treasury NV (STNV).
- •HMRC disallowed SHL's interest deductions on the loan, claiming an 'unallowable purpose' under sections 441 and 442 of the Corporation Tax Act 2009 (CTA 2009).
- •SHL appealed, arguing the loan's main purpose was not tax avoidance, or alternatively, that a just and reasonable apportionment should apply.
- •The Tribunal considered extensive documentary and witness evidence, spanning several years and thousands of pages.
Legal Principles
A company has an 'unallowable purpose' if its purposes for a loan relationship include a purpose not among its business or commercial purposes.
Sections 441 and 442, CTA 2009
A tax avoidance purpose is not necessarily fatal; it's a business purpose unless it's the main purpose.
Travel Document Service v HMRC [2018] EWCA Civ 549
The company's subjective purposes matter, considering the use made of the borrowed money.
Travel Document Service v HMRC [2018] EWCA Civ 549; Fidex Ltd v HMRC [2016] EWCA Civ 385
The unallowable purpose rule does not automatically apply simply because a loan secures a tax advantage.
BlackRock Holdco 5 LLC v HMRC [2024] EWCA Civ 330; Kwik-Fit Group Ltd v HMRC [2024] EWCA Civ 434
Determining whether a tax advantage is a 'main purpose' is a question of fact, considering its significance to the taxpayer and the legislative code.
IRC v Kleinwort Benson [1969] 2 Ch 221; IRC v Sema Group Pension Scheme Trustees [2002] EWCA Civ 1857
Even if a company is part of a wider scheme, its purposes are not necessarily those of the scheme.
JTI Acquisition Company (2011) Ltd v HMRC [2024] EWCA Civ 652
Outcomes
Appeal dismissed.
The Tribunal found the SHL directors' sole purpose in entering into the loan was to secure a tax advantage for the Syngenta Group, making it an 'unallowable purpose' under CTA 2009.
Similar Cases
JTI Acquisitions Company (2011) Limited v The Commissioners for HMRC
[2023] UKUT 194 (TCC)
Kwik-Fit Group Limited & Ors v The Commissioners for HMRC
[2024] EWCA Civ 434
Hargreaves Property Holdings Limited v The Commissioners for HMRC
[2024] EWCA Civ 365
Shinelock Limited v The Commissioners for HMRC
[2023] UKUT 107 (TCC)