HMRC v Bristol and West

In HMRC v Bristol and West [2016] EWCA Civ 397 (27 April 2016) the Court of Appeal found that HMRC had not issued a closure notice and that the disregard provisions of FA 2002 Sch 26 para 28 could only apply to a novation between group companies if both parties came within its scope.

The appeal raised two discrete issues arising from tax litigation in the FTT and UT by Bristol & West (B&W) a member of the Bank of Ireland group. These concerned the appropriate corporation tax treatment of the novation of a portfolio of ‘in the money’ interest-rate swaps (‘the novation’) to another company in the same group Bank of Ireland Business Finance (BIBF) for a premium of £91m.

The first issue was whether in the course of correspondence between HMRC and B&W HMRC had issued a closure notice which disabled any...