CFM38160 | Loan relationships: tax avoidance: unallowable purpose: burden of proof

CTA09/S441-442

Where HMRC has issued a closure notice indicating that debits (or exchange gains credits) cannot be taken into account under S441(2)-(3), as is the case with other appeals against a closure notice in relation to Corporation Tax, it is for the taxpayer to demonstrate that the notice, and the consequent amendments to its company return, are incorrect and therefore the burden of proof is on the taxpayer. This was confirmed in Oxford Instruments UK 2013 Ltd v HMRC [2019] UKFTT 0254, see, in particular, paragraph 96. Of course, in issuing the closure notice HMRC will need to obtain sufficient information to arrive at an informed and sustainable conclusion.