In Bristol & West v HMRC (FTC/77/2013 – 14 February 2014) the main issue was the treatment of an interest rate swap entered into between Bristol which was subject to the new FA 2002 regime and a company of the same group (BIBF) which was not subject to the new regime (because its accounting period was not caught by it). The scheme was based on the assumption that because of this perceived asymmetry the credit which accrued to Bristol as transferor would not be liable to tax.
The tribunal explained that the ‘disregard’ provisions were meant to apply when both companies were within the regime and to achieve neutrality in relation to intra-group transactions in derivatives. The UT considered that it was unable to give effect to the intention of Parliament as neutrality was not achievable when only one of the companies was within...
