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Norfolk and Montagu on the Taxation of Interest and Debt Finance

Gerald Montagu, Felicity Cullen KC, and E.C.D. Norfolk

Publication Date: May 2024

Publisher: Bloomsbury Professional

Law As Stated At: 9 April 2024

Norfolk and Montagu on the Taxation of Interest and Debt Finance

Norfolk and Montagu on the Taxation of Interest and Debt Finance

Norfolk and Montagu on the Taxation of Interest and Debt Finance provides an authoritative, pragmatic and accessible guide to the taxation treatment of interest and debt finance for both individuals and companies.

Continually reviewed to ensure that the content is accessible and up to date, the text offers unprecedently broad and deep integrated coverage of both the law and accounting practice and as they stand today and have stood in previous years.

The text has also been expanded, in recent years, to offer thematic commentary on the approach taken by the courts to 'deeming' provisions, 'purpose' tests, ‘beneficial ownership’, ‘ordinary share capital’, and the meaning of 'payment', providing an unique and invaluable resource for solicitors, barristers, accountants and all tax practitioners whether working 'in house' or in private practice.

The wide range of topics covered in this text include:

  • what constitutes interest
  • whether interest is yearly and payable subject to withholding;
  • reporting obligations under FATCA and the CRS;
  • income tax, capital gains tax and corporation treatment of financing arrangements (including Shari'a arrangements);
  • IFRS GAAP and UK GAAP relevant to the corporation tax treatment of financing arrangements;
  • interest restriction and hybrid mismatch rules;
  • the taxation of employment-related and close company loans;
  • special regimes: e.g. P2P lending, the taxation of securitisation companies and QHACs
  • stamp tax, IHT, CGT and VAT treatment of interest and loans;
  • interest on underpaid and overpaid tax;
  • the taxation of repurchase and stock lending arrangements; and
  • HMRC's Code of Practice on Taxation of Banks, the Bank Levy (as rescoped from 1 January 2021) and the Bank Surcharge.

What have recent releases covered?

Recent releases (up to and including the February 2024 update) cover a multitude of topics, including:

  • Commentary on R (oao Refinitive Limited and others) v Commissioners for HMRC (Diverted Profits Tax notice 7.2398A
  • Commentary on the Supreme Court decision in Target Group Limited v Commissioners for HMRC ([2023] UKSC 35) 11.71A-11.71B
  • Finance Act 2023 and the Finance (No.2) Act 2023
  • International Tax Enforcement (Disclosable Arrangements) Regulations 2023 (SI 2023/38), Taxes (Interest Rate) (Amendment) Regulations 2023 (SI 2023/216), International Organisations (Tax Exemptions Designation) Order 2023 SI 2023/348) and International Tax Compliance (Amendment) Regulations 2023 (Si 2023/461)
  • First-tier Tribunal decisions in Mr Marcus Jays and Mrs Karen Jays v HMRC ([2022] UK FTT 00420 (TC)), Peter Gould v HMRC ([2022]) UK FTT 00431 (TC)), Raj Sehgal and Sanjeev Mehan v HMRC ([2022] UK FTT 00312 (TC)), Muller UK & Ireland Group LLP (and others) v HMRC ([2023] UKFTT 00221 (TC)), Simon England and Debra England v HMRC ([2023] UKFTT 00313 (TC)), James Scott v Commissioners for HMRC ([2023] UKFTT 00360 (TC)) and Swiss Centre Limited v Commissioners for HMRC ([2023] UKFTT 449 (TC))
  • Upper Tribunal decisions in Kwik-Fit Group Limited (and others) v HMRC ([2022] UKUT 00314 (TCC)), HBOS PLC and Lloyds Banking Group PLC v Commissioners for HMRC ([2023] UKUT 00013 (TCC)), HFFX LLP (and others) v HMRC ([2023] UKUT 73 (TCC), Hargreaves Property Holdings Limited v HMRC ([2023] UKUT 00120 (TCC)), Shinelock Limited v HMRC ([2023] UKUT 00107 (TCC)), GE Financial Investments v Commissioners for HMRC ([2023] UKUT [2023] UKUT 00146 (TCC))
  • High Court decision in Manolete Partners PLC v Paul Anthony Rutter and Joanne Therese Rutter ([2022] EWHC 2552 (Ch))
  • Court of Appeal decisions in McClean & Others v Andrew Thornhill ([2023] EWCA Civ 446) and Thomas William Good v HMRC ([2023] EWA Civ 114)
  • ECJ decision in Gallaher Limited v HMRC (C-707/20)
  • HMRC’s new ‘unallowable purpose’ guidance and the withdrawal in light of Brexit of HMRC’s previous practice in relation to late payment when interest is paid gross in the absence of a direction from HMRC (May 2023).