Supreme Court refuses Blackrock’s appeal on tax relief of 2009 Barclays deal
The highest court in the country refused to hear Blackrock’s appeal after it lost its case against the tax agency over its 2009 acquisition of Barclays Global Investors.
A structure by the Blackrock Group, Blackrock Holdco 5, LLC, was the topic of a Court of Appeal hearing in March, as it sought to appeal a decision that sided with HMRC.
The legal case stemmed from the structure used to acquire the North American investment management business of Barclays Global Investors (BGI) from Barclays Bank in December 2009.
Blackrock acquired BGI for approximately $13.5bn (£10.4bn), comprising $6.6bn in cash and the balance in shares in the asset manager giant.
Blackrock Holdco 5, LLC is Delaware-incorporated but it’s a UK tax resident company. It was used to issue loan notes to its parental entity in the Blackrock group totalling $4bn.
The loan notes were issued in return for the loan Holdco 5 LLC received from its parent, Blackrock Holdco 4, LLC and were a form of intra-group financing.
HMRC disallowed a tax deduction for LLC5, but its first challenge to the deduction failed at the First Tier Tribunal (FTT), as the FTT ruled that whilst there was a tax avoidance purpose for entering into the loan arrangement, there was also a commercial purpose.
However, the tax agency appealed this decision to the Upper Tribunal, which sided with HMRC in 2022.
Blackrock took this decision to the Court of Appeal, but in April, the court dismissed Blackrock’s appeal. Speaking at the time, a spokesperson for asset manager said it “has paid all of its UK corporation tax, including the payment some time ago of all tax due in relation to this matter”.
The asset manager added that it was “closely evaluating our next steps”. Those next steps included trying to take this case to the UK Supreme Court.
According to the Supreme Court’s decisions on October’s permissions to appeal, it refused Blackrock’s application on 13 October.
The court reasons that permission to appeal was refused on the ground that the appeal does not raise an arguable point of law.
An HMRC spokesperson said: “We note the Supreme Court’s decision to refuse the application for permission to appeal against the Court of Appeal’s ruling.”
While a Blackrock spokesperson said: “BlackRock has paid all of its UK corporation tax, including the payment some time ago of all tax due in relation to this matter. The application for permission to appeal was made to obtain clarity on the operation of a specific point of tax law. We acknowledge the Supreme Court’s decision.”