Developments in loan relationships and derivative contracts

Loan relationships and derivative contracts

Since they were first introduced, the loan relationships and derivatives contracts regimes have included rules which test the purposes for which a company is a party to or acquires/disposes of rights and obligations under a loan or derivative; the unallowable purposes provisions. The provisions are a key consideration when structuring transactions and reorganisations.

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M&A Matters: Developments in loan relationships and derivative contracts

For many years, disputes were not litigated which meant that there was no case law authority as to how the provisions should be applied. This now seems a long time ago as there have been at least seven decisions of the Courts considering the unallowable purpose rules since 2008.

In this article, we consider the most recent of these cases, the First Tier Tribunal (“FTT”) decision in Travel Document Service and Ladbroke Group International v Commissioners for HMRC (“Ladbrokes”) and what this tells us about the unallowable purposes rules.

Read the full article in the M&A Matters Spring 2016 edition PDF where further detail will be provided on:

  • The two elements to the arrangements undertaken by the taxpayer.
  • The decision of the FTT
  • What this tells us about the unallowable purposes rule?

 

For further information, please contact: 

Rob Norris

Director, KPMG in the UK

T: +44 12 1232 3367

Mark Eaton

Director, KPMG in the UK

T: +44 12 1232 3405

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