Q&A: Lloyds Asset Leasing Ltd: the ‘main purpose’

The concept of the main purpose was put to the test again recently in the First-tier Tribunal (FTT) this time in the context of cross-border group relief claimed by a UK company as it sought to extract assets and losses from an underperforming jurisdiction.

What is the background to this case?

Lloyds Asset Leasing Limited (LAL) a subsidiary of Lloyds Banking Group (LBG) claimed cross-border group relief (CBGR) under Part 5 of CTA 2010. The claim related to significant losses acquired as part of LBG’s acquisition of the Royal Bank of Scotland’s Irish subsidiary Bank of Ireland Scotland Limited (BOSI).

Due to market conditions LBG sought to exit the Irish market and explored multiple strategic options including a straight exit merging BOSI with LBG or reorganising the existing legal structure. Various internal and external tax and regulatory experts were involved...