Taking stock of unallowable purpose

In July 2009 HMRC published what I have always thought was a rather useful discussion document entitled Simplifying unallowable purpose tests with the laudable aim of examining how new and existing unallowable purpose tests ‘could be simplified to improve comprehension clarity and consistency’. More than half of its 57 pages were taken up with draft guidance setting out HMRC’s understanding of purpose tests.

Fast forward to 2014 and the position seems as complicated as ever. The reaction I got recently from an American tax lawyer to whom I had just explained how one might go about applying the unallowable purpose rule in CTA 2009 s 441 to a straightforward intra-group loan was a simple ‘wow!’ However...