[INTM513060] Thin capitalisation: practical guidance: opening a case: origins and destinations of debt
Purpose of the borrowing
Part 4 of TIOPA 2010 has no purpose test. It simply requires the arm's length principle to be applied to the funding. Borrowing tends to take place with a commercial object in mind, and the issue of purpose applies more often to the question: why hasn't the company repaid some or all of the debt? Purpose is, however, of key significance for CTA09/S441-S442, which is used to challenge loans where there is a purpose "which is not amongst the business or other commercial purposes of the company.