Taxation of loan relationships—late-paid interest
Taxation of loan relationships—late-paid interest

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Taxation of loan relationships—late-paid interest
  • What were the late-paid interest rules introduced to counter?
  • Partial repeal by FA 2015
  • Rationale
  • Limitation of scope
  • Deeply discounted securities
  • Regime anti-avoidance rule
  • The late-paid interest rules post FA 2015
  • Interest not paid within 12 months
  • Creditor does not bring the full amount of the interest into account
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

The loan relationships rules in Part 5 of the Corporation Tax Act 2009 (CTA 2009) contain certain anti-avoidance measures relating to the late payment of interest. Where these measures apply, they can defer the time at which a corporation tax deduction is available to a debtor company in respect of interest.

Although they used to apply more widely, Finance Act 2015 (FA 2015) significantly limited the scope of the late paid interest rules with the result that they are now largely of historic relevance only. Indeed, to a large degree the late-paid interest rules have been superseded by the loan relationships regime-wide anti-avoidance rule (the regime TAAR) that was introduced by Finance (No 2) Act 2015. The relevance of the late-paid interest rules now is, broadly speaking, limited to certain loans made by participators to close companies, and by trustees of occupational

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