What is an unallowable purpose?

HMRC is taking an increasingly aggressive approach to disputes involving CTA 2009 s 441 – the targeted anti-avoidance rule on unallowable purpose. HMRC’s starting point will be that anything which is more than incidental could be a main purpose, but a careful review is needed: what were the subjective intentions of those implementing the transaction? This is a question of fact and evidence is crucial. The key point is whether the transaction is a commercial one, implemented tax efficiently, or a tax driven ‘scheme’. Companies with genuine borrowing, for commercial reasons, should stand firm against HMRC’s possible attack