Kyle Rainsford (Addleshaw Goddard) explains that the Upper Tribunal has largely eschewed the FTT’s extensive reliance on UK domestic law cases on ‘purpose’ when determining whether a treaty anti-abuse provision applies.
UK tax has to be withheld from interest payments to Cayman-resident companies but if the UK/Irish treaty applies not from those to Irish-resident companies. A Cayman company looking down the barrel of an interest payment with UK withholding tax might therefore naturally seek to sell the debt to an Irish company; the two can set the price so as to split the benefit of the withholding tax saving. The question in HMRC v Burlington Loan Management DAC [2024] UKUT 152 (TCC) was whether doing so was enough to have a ‘main purpose of taking advantage’ of treaty benefits and therefore rescind them.
The First-tier Tribunal (FTT) held that this wasn’t enough as I reported in...
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Kyle Rainsford (Addleshaw Goddard) explains that the Upper Tribunal has largely eschewed the FTT’s extensive reliance on UK domestic law cases on ‘purpose’ when determining whether a treaty anti-abuse provision applies.
UK tax has to be withheld from interest payments to Cayman-resident companies but if the UK/Irish treaty applies not from those to Irish-resident companies. A Cayman company looking down the barrel of an interest payment with UK withholding tax might therefore naturally seek to sell the debt to an Irish company; the two can set the price so as to split the benefit of the withholding tax saving. The question in HMRC v Burlington Loan Management DAC [2024] UKUT 152 (TCC) was whether doing so was enough to have a ‘main purpose of taking advantage’ of treaty benefits and therefore rescind them.
The First-tier Tribunal (FTT) held that this wasn’t enough as I reported in...
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