Swiss Centre Limited v HMRC: Upper Tribunal denies £33.5m corporation tax deduction for NAMA-era group payment

When NAMA, Ireland's post-financial-crisis debt recovery agency, threatened to withhold a key document and potentially collapse a £197.5 million London property sale, the MAR Connection property group paid an extra £33.5 million to clear the group's wider debts. Whether SCL, the company that owned the property, could treat that payment as a deductible expense for corporation tax purposes is the question the Upper Tribunal has now settled in Swiss Centre Limited v HMRC [2026] UKUT 227 (TCC).

The MAR Connection was a Northern Irish property group carrying nearly £1.05 billion in assets and £667 million in debt by 2008. Swiss Centre Limited (SCL) owned the Swiss Centre in London, which sold for £197.5 million in November 2011, with £163 million going to NAMA. The disputed £33.5 million had two components: an "Additional Sum" above the market value of other group entities' distressed development properties, and €11.5 million connected to a guarantee SCL had given for a fellow group company, Lavangna. SCL argued both were deductible under the loan relationship rules in the Corporation Tax Act 2009. HMRC said they were distributions, not expenses.

The First-tier Tribunal found for HMRC on all key points. The Upper Tribunal (Huddleston J and Judge Mandalia) dismissed all five grounds of appeal.

On the Additional Sum, the central question was causation. SCL argued the payment arose because NAMA threatened to withhold the form DS1 needed to release its charge over the Swiss Centre, creating a direct causal connection to SCL's loan relationships. The Upper Tribunal applied the principle from Union Castle Mail Steamship Co Ltd v HMRC [2020]: where there are multiple inseparable causes for a loss, it cannot "arise from" a single qualifying transaction. The Additional Sum had been substantially on the table for months before NAMA raised the DS1 issue. NAMA's leverage focused minds and sharpened the pressure, but it did not create the payment. The FTT was entitled to find a "wider fact pattern" encompassing the group's overall debt restructuring, the release of Messrs McAleer and Laverty's personal guarantees, and the securing of unencumbered development properties for the MAR Connection. That was not a finding the Upper Tribunal was willing to disturb.

On the Lavangna Sum, SCL argued that paying €11.5 million subrogated it to NAMA's rights against Lavangna, creating a loan relationship that generated a deductible loss when those rights proved worthless. The Upper Tribunal rejected this. The Lavangna Guarantee was never formally called; payment was made pursuant to the NAMA Deed rather than under the guarantee itself, and any rights against Lavangna were worthless from the outset. Going further, the tribunal confirmed that even if a qualifying loan relationship had arisen, the unallowable purpose rules in section 441 CTA 2009 would have denied the deduction: the guarantee had been entered into for the benefit of the wider MAR Connection, not SCL's own commercial purposes.

The judgement also offers a useful reminder on witness evidence in complex commercial disputes. Accounts from two key witnesses had shifted between their written statements and their oral evidence, and the FTT was entitled to treat that divergence as evidence of a post-event narrative being constructed rather than genuine recollection. The Upper Tribunal endorsed the approach: it is not enough on appeal to show the FTT could have decided differently. The question is whether its conclusion was rationally insupportable.

The broader lesson from Swiss Centre is straightforward and somewhat unforgiving. Where a group company makes a payment that achieves multiple things simultaneously, including discharging another entity's debt, releasing personal guarantees, and enabling a wider restructuring, the case for treating it as a deductible expense of the paying company alone is very difficult to advance. The "arise from" requirement in the loan relationship rules demands a direct causal link to a qualifying transaction; the broader commercial context, however powerful as leverage, will not suffice.

Swiss Centre Limited v The Commissioners for HMRC [2026] UKUT 227 (TCC), Huddleston J and Judge Vinesh Mandalia, 22 June 2026