‘Unallowable purpose’ taboos broken (JTI Acquisition Company (2011) Ltd v HMRC)

Table of contents

• What are the practical implications of this case?
• What was the background?
• What did the tribunal decide?
• Case details

Article summary

Tax analysis: Gerald Montagu, Counsel at Gide, Loyrette Nouel considers JTI Acquisition, a decision which is likely to prove controversial and cause considerable disquiet since the First-tier Tax Tribunal (FTT) has agreed with HMRC’s challenge to long-accepted taboos (such as that borrowing to finance a corporate acquisition is not an unallowable purpose), notwithstanding counsel for the appellant’s remonstrance that the approach advocated by HMRC was ‘unprecedented’ and such as to render this case the first of its kind.