JTI Acquisition Company (2011) Ltd v HMRC

In JTI Acquisition Company (2011) Ltd v HMRC [2022] UKFTT 166 (TC) (19 April 2022) the First-tier Tribunal (FTT) held that the loan relationship unallowable purpose rule applied to disallow debits in respect of interest on loan notes issued by a company under a series of transactions by which a multinational group acquired a US company.

A multinational group of companies in the mining industry wished to purchase a Texan company (LTT). As part of a nine-step series of transactions the appellant company (JTIAC) was incorporated in the UK as a special purpose vehicle to be the holding company of LTT. Funding was channeled to JTIAC in several ways including the issue of $500m in loan notes to its immediate US parent company (JGI). The loan notes were then assigned from JGI to a group company incorporated in the Cayman Islands. JTIAC applied to HMRC for an advance thin...