In HMRC v Bayfine UK (CA – 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. The transactions had no commercial purpose other than to produce a matching profit and loss and were carried out for the purpose of taking advantage of the different treatment of the profit in US and UK tax law. 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...
