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Travel Document Service; Ladbroke Group International v CRC, Court of Appeal, 20 March 2018
Main purpose of a loan relationship arrangement
The taxpayers took part in a tax avoidance scheme that was notified to HMRC under the disclosure of tax avoidance schemes regime (FA 2004 Pt 7). The scheme involved bringing a holding of a subsidiary’s shares within the loan relationship rules by entering into a derivative contract called a ‘total return swap’. It then depressed the value of the shares by novating a large loan liability into the subsidiary from another group company.
The aim was to accrue a large loan relationship debit in the shareholding company as a result of the reduction in the fair value of the shares in its subsidiary. The subsidiary company also accrued conventional loan relationship debits because of its liability to interest on the loans novated to it.
HMRC...
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