A tonnage tax case has implications for the loan relationships rules, writes Heather Self
I have only written about tonnage tax once before and that was to suggest that John Prescott had announced its introduction on 12 August 1999 while his Treasury colleagues were on holiday. But the First-tier Tribunal decision in the Euroceanica case (Euroceanica (UK) Ltd v HMRC TC/2012/03605) is of wider application to loan relationships and particularly the question of whether interest income can be regarded as arising from activities which form an ‘integral part of the trade’ (CTA 2009 s 302(5)).
Euroceanica had borrowed money in order to finance ship purchases. As part of the terms of the loan it was required to hold sums on deposit. The interest arising on those deposits...
