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HMRC’s approach to purpose-based enquiries

Speed read
HMRC’s (substantially) revised guidance on the unallowable purpose rules helpfully confirms a number of technical points emerging from recent case law. It also gives an indication of HMRC’s practical approach to these enquiries, including its focus on contemporaneous documentary evidence. The guidance and accompanying examples illustrate a number of factors that HMRC considers relevant to whether or not the borrowing company has a tax purpose, such as whether the arrangements are UK base erosive, are the result of complex structuring, or include shareholder debt. This will also be of relevance to corporate groups considering other purpose-based anti-avoidance rules.

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