Blackfriars Hotel (UK) Holdings Limited v The Commissioners for HMRC
Decision date: 6 December 2024
Neutral citation: [2024] UKFTT 1095 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether s.790G CTA 2010 prevents Blackfriars Hotel (UK) Holdings Ltd (BHHL) from using carried‑forward non‑trading loan relationship deficits in 2016 and later periods because those profits "arise as a result of" the tax arrangements (the BHL New Loan). The First‑tier Tribunal held that, on a purposive construction and applying a causation test, the tax arrangements were an efficient cause of BHHL's 2016 profits and therefore s.790G disapplied BHHL's carried‑forward deficits. The appeal was dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The Tribunal treated "relevant profits" under s.790G as profits that "arise as a result of" the tax arrangements and construed the provision purposively to prevent loss‑refreshing avoidance. The appropriate causation test is that the tax arrangements must be an efficient cause of the profits (they need not be the sole or dominant cause), and where they are an efficient cause the carried‑forward non‑trading loan relationship deficits may be disallowed.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment suggests (obiter) that a purposive interpretation of fiscal anti‑avoidance provisions supports treating concurrent causes permissively rather than requiring exclusive causation; it also indicates the correct quantification method is a "top‑down" comparison of actual profits with a hypothetical profit figure absent the tax arrangements, rather than an item‑by‑item apportionment.