M J P Media Services Ltd v Commissioners for Her Majesty's Revenue and Customs

Decision date: 1 July 2010

Neutral citation: [2010] UKFTT 298 (TC)

Overall AI summary confidence: high

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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

M J P Media Services Ltd appealed HMRC’s denial of a £6,690,000 loan relationship deduction arising from a partial waiver of an inter-company debt. The Tribunal found MJP failed, on the balance of probabilities, to prove key transactions were cash loans and excluded several items from the loan relationship; as a matter of law it held Schedule 9(6)(3) requires the waived amount to be ignored for the creditor’s debit calculation. 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: medium

Two points of law underpinned the decision: (1) where an appellant relies on the existence of cash lending, the evidential burden rests on the appellant and absence of primary bank records or first‑hand treasury evidence can justify finding no loan relationship on the balance of probabilities; and (2) for connected‑party loan relationships Schedule 9(6)(3) operates to treat a released/waived liability as ignored for the purposes of computing debits/credits under the loan relationships code, so a waiver does not create an allowable debit for the creditor in the circumstances of this case.

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 Tribunal observed that an assignment or substitution can transfer the creditor’s position, but to treat an assigned obligation as a loan relationship the appellant must prove the underlying obligation was itself a loan relationship. It also noted that payments by a company to a third party at the request of a debtor are not, without more, within the ordinary meaning of "for the lending of money" for the purposes of the tax code.

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