14 July 2015

FTT Decision: Abbey National Treasury Services Plc v HMRC

Corporation tax – loan relationship rules –debit relating to “tracker shares” linked to in the money swap receipts –derecognised for accounting purposes-whether deductible debit for loan relationship rules – legal and accounting concepts of loss – whether arising from derivative contract – whether transfer pricing rules at Schedule 28AA applied to tracker shares – whether shares are a provision for transfer pricing purposes – HELD –Debit did not reflect fair representation of loss from transactions –debit did not arise from derivative contract – transfer pricing rules broad ambit – share issue could amount to a provision – transfer pricing rules applied to issue price of tracker shares – appeal dismissed.

Kevin Prosser QC & Zizhen Yang, instructed by Slaughter and May, acted for the Appellant.

Julian Ghosh QC & Elizabeth Wilson, instructed by HMRC, for the Respondents.

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