Hargreaves Property Holdings Ltd v Revenue and Customs: FTTTx 2 Nov 2021

CORPORATION TAX – whether interest paid by a UK resident company out of assets situated in the United Kingdom under a debt which, if enforced, would be enforced against assets situated in the United Kingdom had a UK source regardless of where the credit giving rise to the debt was extended and notwithstanding provisions in the loan agreement requiring the interest to be paid outside the United Kingdom, specifying that the governing law was to be that of a jurisdiction outside the United Kingdom and specifying that that non-UK jurisdiction was to be the exclusive jurisdiction for enforcement – yes – whether interest on short-term loans which were repaid within a year out of the proceeds of new loans from the same lenders in circumstances where, on the balance of probabilities, the series of loans were intended to provide long-term funding for the borrower was yearly in nature – yes – whether the Appellant could rely on the – industrial or commercial profits – in the UK/Guernsey double tax treaty to make interest payments to a Guernsey resident company without withholding – not without the making of a claim and the issue of a direction – whether the Appellant could rely on the exemption from withholding tax for interest to which a UK resident company was beneficially entitled when the recipient acquired the interest only just before the interest payment was made and did so for no purpose other than availing itself of the exemption – except to the (de minimis) extent that an interest payment received exceeded the amount paid for the right to receive that interest payment, no-‘ IRC v McGuckian applied

[2021] UKFTT 390 (TC)
England and Wales

Corporation Tax

Updated: 01 December 2021; Ref: scu.669781