In GDF Suez Teesside v HMRC [2015] UKFTT 413 (11 August 2015) the FTT found that the transfer of a debt had given rise to a taxable profit on a loan relationship even though such a profit was not recognised in the company’s GAAP compliant accounts.
Following the collapse of Enron Teesside had been owed substantial amounts for failure to perform under various electricity contracts. It had transferred those claims to a wholly owned subsidiary which was a controlled foreign company; and had notified the transfer to HMRC under DOTAS. The notification stated that the arrangement was ‘to enable a UK company to indirectly realise the value of an existing asset … which had no carrying value under UK GAAP without triggering an immediate tax charge by transferring it to a foreign subsidiary in exchange for the issue of shares’.
Teeside contended that the assignment of...
