Court of Appeal—interest on recurring loans constituted yearly interest and UK to UK exemption did not apply (Hargreaves Property Holdings v HMRC)

Table of contents

• The background
• What did the Court of Appeal decide?
• Yearly interest
• No UK to UK exemption because UK resident recipient not beneficially entitled to the interest
• Why it matters
• Case details

Article summary

Tax analysis: In Hargreaves, the Court of Appeal dismissed the borrower’s appeal, upholding the decisions of the First-tier Tax Tribunal (FTT) and the Upper Tribunal (UT), that the interest on recurring loans was yearly interest (even if the duration of individual loans was less than a year) and the UK tax resident company, which was the recipient of the interest, was not beneficially entitled to the interest so that the UK to UK withholding tax exemption did not apply. Consequently, UK income tax should have been deducted from the interest payments.