Q: My client, a UK limited company, AB Ltd, issued convertible loan notes with an interest rate of 12% and with no fixed redemption date. The holders of the loan notes include a Monegasque company and a US resident individual. There are also UK resident companies holding these convertible loan notes in AB Ltd. Is it correct that the interest will be deductible for corporation tax purposes, under the loan relationship rules, or could these payments be caught by the provisions of CTA 2010 s 1000, which treat certain interest payments as distributions?
