Practitioner view: Unallowable purposes

The critical element of the unallowable purposes test in CTA 2009 s 441 is ascertaining the company’s purpose. It is the company’s subjective purpose which matters (Travel Document Service [2018] STC 723). ‘Subjective’ in this context means the actual intention of the company in entering the loan relationship not what an observer might objectively discern from the evidence. That subjective purpose is determined by reference to the board of directors of the company although it may be necessary to also consider the purpose of the shareholders (particularly a parent company: JTI [2022] UK FTT 166)). In some situations it might be relevant to consider the influence of an external third party such as an adviser (Iliffe News [2012] UKFTT 696 and AH Field [2012] UKFTT 104). Put simply the focus is on the ‘decision makers’ (

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