Heather Self (Blick Rothenberg) assesses the impact of the recent Court of Appeal judgment in Lomas on whether interest is ‘short’ or ‘yearly’.
The question of whether interest is ‘short’ or ‘yearly’ is of practical importance in many common situations. It is most frequently encountered in a multinational group where the overseas parent company has an intercompany debt due to it from the UK subsidiary and nobody has thought carefully about whether any interest paid is ‘yearly’ interest. UK legislation (ITA 2007 s 874) imposes a ‘duty to deduct from certain sums of yearly interest’ and requires the person by or through whom the payment is made to deduct 20% (basic rate income tax) at source.
Many double taxation agreements (DTAs) reduce the withholding tax rate to zero but there is a nasty trap which catches out many UK subsidiaries. In order to apply the reduced...
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Heather Self (Blick Rothenberg) assesses the impact of the recent Court of Appeal judgment in Lomas on whether interest is ‘short’ or ‘yearly’.
The question of whether interest is ‘short’ or ‘yearly’ is of practical importance in many common situations. It is most frequently encountered in a multinational group where the overseas parent company has an intercompany debt due to it from the UK subsidiary and nobody has thought carefully about whether any interest paid is ‘yearly’ interest. UK legislation (ITA 2007 s 874) imposes a ‘duty to deduct from certain sums of yearly interest’ and requires the person by or through whom the payment is made to deduct 20% (basic rate income tax) at source.
Many double taxation agreements (DTAs) reduce the withholding tax rate to zero but there is a nasty trap which catches out many UK subsidiaries. In order to apply the reduced...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
