one of the main purposes

BLM was a substantial Irish-resident investment company, which started acquiring proved claims in the administration of Lehman Brothers International (Europe) ("LBIE" – a UK resident) in 2011 and came to own 443 such claims. In February 2018, a Caymans company (“SICL”), which was unrelated to BLM and was then in liquidation, instructed a third-party broker to market its claim for post-administration interest from LBIE (the “SAAD Claim”).

A British taxpayer (TDS) used a total return swap to cause its share investment in a subsidiary (LGI) to be deemed to be a loan. However, its hoped-for tax benefit was denied by an anti-avoidance provision that applied if “one of the main purposes” for being a party to a loan relationship was to secure relief from tax. In this regard, TDS emphasized that it had held its TDS shares long before entering into the swap and a related novation contract. In rejecting this contention, Lord Justice Newey stated (at para. 46):

As a result of a rule change of the Dental College, it was necessary for ownership of all the voting common shares of the professional corporation through which the taxpayer carried on his dental practice (“MDPC”) to be transferred from a family trust to him. This was accomplished by those shares being distributed out of the trust to his wife qua capital beneficiary in 2002, followed by their immediate gifting to him. Dividends paid by MDPC to the taxpayer in 2010 and 2011 were reported as his wife’s income under s.

Trudel JA stated (at para. 24) that:

[C]ounsel for the appellants is ignoring the purpose and spirit of subsection 83(2.1) of the Act in attempting to persuade us that the word "main" does not leave open the possibility of having two or three motivations that explain a transaction or series of transactions.

An argument that the exception in s. 83(2.1) applied was not raised with sufficient notice.