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02 April 2013

FTT Decision: Fidex Ltd v The Commissioners for Her Majesty’s Revenue & Customs

CORPORATION TAX – loan relationships – debit under paragraph 19A, Schedule 9, Finance Act 1996 in respect of the difference in the accounting value of loan relationships on a change of accounting practice – appellant company changing accounting practice from UK GAAP to IFRS at the 2004 year-end – appellant claiming the debit in the 2005 accounting period – whether there was as a matter of fact the relevant difference in the accounting value – expert evidence as to UK GAAP and IFRS considered – found that there was the relevant difference in accounting value – whether in that case the debit was not to be brought into account, as being attributable to an unallowable purpose, under paragraph 13, Schedule 9, Finance Act 1996 – found that the appellant’s tax avoidance purpose was achieved at the 2004 year-end – there were no times during the 2005 accounting period during which the appellant had an unallowable purpose such that on a just and reasonable apportionment any part of the debit was to be attributed to it – appeal allowed

John Tallon QC & Charles Bradley acted for HMRC.

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