Deductions of interest on loan notes

In 2009 BlackRock Holdco LLC 5 issued several tranches of loan notes to its parent company as part of the acquisition of Barclays Global Investors. It claimed deductions on the interest paid on the loans. HMRC refused the claims. It said the loan debits were attributable to loan relationships that had an unallowable purpose within the meaning of CTA 2009 s 441. Alternatively the loan relationships that gave rise to the debits were within the scope of TIOPA 2010 s 147 and differed from the arm’s length provisions that would have been made between independent enterprises.

The company appealed.

On transfer pricing the First-tier Tribunal found that although an independent lender would not have entered into the loan on the same terms as the actual transaction if it were lending to LLC5 it would - subject to additional covenants - have lent the same...