The appeal concerned a reorganisation of intra-group debt between Kwik-Fit group companies in 2013, following the group’s acquisition in 2011 by a Japanese company, Itochu Corporation.

Before the reorganisation, the car servicing and tyre giant sought tax advice from its auditors EY, and then subsequently PwC, when they took over the audit in 2013, on how Kwik-Fit’s intra-group debt could be restructured to simplify it.

Under the reorganisation a number of intra-group receivables owed by the appellants were assigned to an intermediate holding company within the Kwik-Fit group, Speedy 1 Limited, and certain additional receivables were created in Speedy 1’s favour.

HMRC formed the view that the reorganisation engaged the unallowable purpose rule in section 441 Corporation Tax Act 2009 (CTA 2009) and largely rejected Kwik-Fit’s claims to tax relief on the interest in respect of the accounting periods ended 31 March 2014, 2015 and 2016, capping the disallowance at the amount of Speedy 1’s non-trading deficits.

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