Q&A: Court of Appeal in Blackrock Holdco 5 LLC

What are the facts of this case?

Blackrock Holdco 5 LLC [2024] EWCA Civ 330 concerns the deductibility of interest paid on intra-group loans that formed part of the structure for Blackrock’s acquisition of Barclays Global Investor (BGI) – a US business. BlackRock 5 LLC was a UK resident company in a chain of entities forming the acquisition structure. It issued loan notes to its immediate parent company and then contributed that borrowed money to BlackRock 6 which then bought BGI. BlackRock 5 claimed non-trading loan relationship debits for the interest paid on the loan. These debits created losses/non-trading deficits in BlackRock 5 which it intended to surrender in group relief to other UK BlackRock entities.

What has happened so far?

HMRC challenged the deductions on two grounds: 1) transfer pricing ie the loans differed from those that would have been made between independent enterprises; or 2) unallowable...