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Bayfine UK v HMRC (and related appeal)

Business Tax: Double tax relief

In Bayfine UK v HMRC (and related appeal) (Ch D – 23 March) a US corporation (BD) had two unlimited subsidiary companies (BKP and BUK) which were both incorporated in the UK. Both BKP and BUK entered into forward contracts as a result of which BKP made a substantial loss and BUK made a substantial profit. BKP surrendered most of its loss as group relief while BUK claimed that its UK tax liability should be extinguished by double taxation relief for US tax which BD had paid on the same profit. (The US taxed the profit in the hands of BD because for federal US income tax purposes BUK was classified as a 'disregarded entity'.) The Revenue rejected BUK's claim to double taxation relief and BUK appealed. The Ch D allowed the appeal. Peter Smith J observed that 'the facts of...

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