UPDATE: THE UT HAS UPHELD AN APPEAL AGAINST THIS DECISION (SEE THE CLARITAX NEWS STORY).
n a ruling on a fairly obscure point, the taxpayer has failed in its appeal in Barclays Bank PLC v HMRC [2024] UKFTT 246 (TC).
Loan relationships – RCIs and warrants issued by subsidiary and parent companies in the context of the 2008 financial crisis – attribution of funds received where stated consideration for the warrants was effectively nil causing the RCIs to be shown in accounts as issued at a discount – was the attribution of funds GAAP compliant – if so did the resulting debits fairly represent losses on the RCIs under the loan relationship rules.
The FTT commented:
“… even if the accounts can show £2.2 billion as the value of the RCIs when issued under GAAP, the Accreted Debit in BBPLC’s accounts does not “fairly represent” losses arising to BBPLC from the RCIs under s84.
As a result the same conclusion would be reached by us that there is no loss arising to BBPLC from the RCIs under the loan relationship rules even were we to accept that the accounts were GAAP compliant in showing that only £2.2bn was paid to BBPLC for the RCIs on issue.”
The company’s appeal was therefore dismissed.
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2024/246
Related content from Claritax Books
Loss reliefs, including reliefs for losses incurred by companies on intangible fixed assets, are covered in depth in the book Tax Losses, written by Katherine Ford BCom FCCA, CTA (Fellow).