Greene King plc v HMRC (and related appeal)

In Greene King plc v HMRC (and related appeal) (TC02069 – 22 June) a company (GP) lent £300m to a subsidiary company (GB) in 2000. GB issued GP with unsecured loan stock valued at £300m redeemable in 2004. In 2003 GP assigned its right to receive interest on the loan stock to another subsidiary company (GK) in return for preference shares which carried the right to a special dividend. GB paid loan interest to GK which paid the special dividend to GP which also retained the right to receive the repayment of the £300m loan. HMRC formed the opinion that the purpose of these arrangements which had been devised by a large accountancy firm was to take advantage of a perceived loophole in the ‘loan relationship’ provisions and to achieve a tax saving by allowing GB to claim a deduction for the interest...