Unallowable purpose and corporate groups

The Court of Appeal’s decision in JTI Acquisition Company (2011) Limited v CRC [2024] EWCA Civ 652 (JTIA) concerning ‘unallowable purpose’ in the context of loan relationships – the unallowable purpose rule (UPR) – follows swiftly on the heels of the court’s decisions in BlackRock HoldCo 5 LLC v CRC [2024] EWCA Civ 330 and Kwik-Fit Group Ltd and others v CRC [2024] EWCA Civ 434. The decisions address the difficulties that arise from the application of the UPR to corporate groups.

Each of these cases concerned circumstances where a corporate group had devised a plan to generate a tax saving at group level which had been implemented through the actions of individual member companies of the group. One of the challenges for taxpayers (and the courts/tribunals) in applying the UPR in such circumstances is the extent to which the purpose of the wider group can be attributed to ...