Kwik-Fit Group Ltd and others v HMRC

In Kwik-Fit Group Ltd and others v HMRC [2021] UKFTT 283 (TC) (11 August 2021) the FTT considered the application of the ‘unallowable purpose’ rule to intra-group loans.

All of the taxpayer companies were members of the Kwik-fit group. Following the acquisition of the group by a new owner a reorganisation of the group’s intra-group loans was carried out. A number of intra-group receivables were assigned by the taxpayers to an intermediate holding company Speedy 1 and three new intra-group loans were created. The interest rate on the assigned loans and one loan already owed to Speedy 1 was substantially increased. The interest rate on intra-group loans that were not involved in the reorganisation was not increased. Speedy 1 had a carried-forward non-trading loan relationship deficit of £48m and as a result of the reorganisation the deficit was utilised within three years rather than around...