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CTA09/S441-442

Overview

The ‘unallowable purpose rule� at s441-442 is principally an anti-avoidance provision. The Financial Products Team (Business, Assets and International) is responsible for its overall policy and the Counter-Avoidance Technical Team for its operation.

The unallowable purpose rule is engaged in relation to a loan relationship where the loan relationship or related transaction has an ‘unallowable purpose� at times in an accounting period. It provides that debits (or exchange gains credits) are not to be taken into account to the extent that, on a just and reasonable apportionment, the debits (or exchange gains credits) are attributable to the unallowable purpose.

Many of the core elements of the rule are a question of fact, and so will depend on the particular facts and circumstances of the arrangements being considered.

The rest of this guidance is structured as follows:

• CFM38115 sets out a technical summary of the rule, intended to be sufficient that it is possible to read this and then go straight to the practical guidance in many cases

• CFM38120Ìý³Ù´Ç CFM38167 set out the technical position on a number of points in more detail

• CFM38170Ìý³Ù´Ç CFM38200 contain practical guidance, including guidance at CFM38190 on situations where the unallowable purpose rule would or would not normally apply