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Vocalspruce Ltd v HMRC

In Vocalspruce Ltd v HMRC (Upper Tribunal – 28 June) the parent company of a group subscribed for zero coupon loan notes in several group companies. Those loan notes were then transferred to an associated company (V) for shares issued with a nominal value equal to the then value of the loan notes but at a premium on terms that the premium would be paid up by capitalising profits arising on the loan notes and appropriating those sums to V’s share premium account. V claimed that the effect of FA 1996 s 84(2)(a) was that the credit that would otherwise be brought into account for corporation tax purposes on the accrual of profits on the loan notes under the ‘loan relationships’ rules did not fall to be brought into account. HMRC issued an amendment to V’s return increasing its taxable profit by bringing the disputed credit...

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