BlackRock UK tax appeal on $13.5bn BGI deal fails

Wednesday 17th April 2024 07:12 EDT

BlackRock, the world's largest asset manager, has lost an appeal regarding UK tax it attempted to recover from HM Revenue & Customs. 

This pertains to its $13.5 billion acquisition of Barclays Global Investors in 2009.

The appeal concerns a structure implemented by BlackRock during its acquisition of the business from Barclays. The US portion of the BGI business was acquired through a corporate arrangement involving a UK tax resident entity, LLC5. This entity was financed by $4 billion in loans from another BlackRock group entity based in the US.

The UK tax resident entity sought tax relief for interest costs associated with the loans and attempted to offset the resulting tax losses against profits of other profitable groups within the BlackRock group. 

The Court of Appeal's decision marks the conclusion of a prolonged dispute spanning several years.

HMRC originally rejected the tax deductions, before the First-tier Tribunal found in BlackRock’s favour. That decision was reversed on appeal to the Upper Tribunal, and upheld by the Court of Appeal, albeit on different grounds.

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