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GDF Suez Teesside Ltd (formerly Teesside Power Ltd) (TC4590)
After Enron’s collapse in 2001 the taxpayer submitted substantial claims against the group for failure to fulfil electricity contracts. In 2006 it transferred the claims to a wholly owned subsidiary TRAIL which was a controlled foreign company. The claims were TRAIL’s only assets. It received £243m for the claims and lent it back to the taxpayer on an unsecured interest-free basis. In July 2008 TRAIL was wound up.
The transfer of the claims was notified to HMRC under the disclosure of tax avoidance schemes regime on the ground that the arrangement was “to enable a UK company to indirectly realise the value of an existing asset … which had no carrying value under UK GAAP without triggering an immediate tax charge by transferring it to a foreign subsidiary in exchange for the issue of shares”.
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