The absence of thin cap safe harbours means that companies seeking comfort that their UK interest expense will be deductible need to agree an ATCA with HMRC. This does not offer complete protection (as unallowable purpose tests can still apply to disallow deductions and an ATCA does not oust the worldwide debt cap provisions); nevertheless the ability to reach a tailored agreement with HMRC reflecting the particular business’s or group’s circumstances generally makes the effort worthwhile and, for taxpayers prepared to engage in such discussions, can outweigh the initial attraction of a ‘one size fits all’ test.
