A former subsidiary of US giant Halliburton, the oil industry services group,
has lost a £15m transfer pricing battle with the UK taxman.
Kellogg Brown & Root (KBR) had tried to claim the capital losses in the
period ending December 31 2000 for shares sold to Highland Holdings (UK)
At the time, KBR was a direct wholly-owned subsidiary of Del-aware firm
Halliburton Company. It was also
a holding company for some of its UK resident subsidiaries. In 1995 Halliburton
HMRC, represented by Rupert Baldry, said the companies were connected. KBR,
represented by Julian Ghosh and James Henderson, argued that being shareholders
in the same company was not enough to imply a connection. Ghosh said to be
connected, they needed to jointly have control of a company and form a group. He
argued the word group implied a common purpose or goal, whereas shareholders may
not even know each other.
Baldry argued: ‘The only connection necessary for there to be a group is the
ownership of shares in the same company. If some other connection was necessary
the draftsman would have defined it expressly.’
Special commissioner John Avery Jones agreed with Baldry’s argument and
dismissed KBR’s appeal.
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