The UK Court of Appeal has handed down its judgment in Blackrock. This decision deals with a number of important questions regarding the application of both the unallowable purpose rule and aspects of the transfer pricing rules to UK corporate borrowing. In relation to the unallowable purpose rule, although a win for HMRC on the facts of the case, taxpayers may find that several aspects of the court's decision provide helpful clarity about an area that continues to be actively raised by HMRC in practice. In relation to transfer pricing, this represented a win for the taxpayer; however, it remains important for groups to carefully assess the risk profile of intragroup transactions when undertaking a transfer pricing analysis, particularly in cases where there may be questions over a borrowing entity's ability to control an income stream on which it is dependent.
International Tax and Treasury