The syndicated loan scheme (SLS) enables the manager of a syndicate of lenders to make a single application on behalf of all of its lending members who are resident in jurisdictions which have a double tax treaty (DTT) with the UK to obtain relief from the obligation to deduct (and account to HMRC for) an amount in respect of UK income tax on UK source interest paid to them provided the relevant DTTs provide for such relief.

This Practice Note refers to the obligation to deduct (and account to HMRC for) an amount in respect of UK income tax from UK source yearly interest payments as a withholding tax even though it is actually a method of collecting UK income tax from the UK-based payer rather than from the recipient.

References in this Practice Note to gross payments are to payments from which tax has not been, and is not required to be, deducted.

This Practice Note explains:

1. •

   how the SLS provides a simpler method of obtaining relief for a syndicate’s lenders