HMRC has indicated it may be changing its view as to the nature of perpetual debt. William Watson and John Meehan consider the ramifications.
For many years banks and insurers have issued hybrid instruments to satisfy part of their regulatory capital requirements. The current version of the concept is called innovative Tier 1 capital. It is attractive because although treated for regulatory purposes as equivalent to equity it is nevertheless regarded for tax purposes as debt and in principle the coupons are therefore deductible.
To achieve this the notes/bonds are in substance a hybrid of debt instrument and preference share....
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:
HMRC has indicated it may be changing its view as to the nature of perpetual debt. William Watson and John Meehan consider the ramifications.
For many years banks and insurers have issued hybrid instruments to satisfy part of their regulatory capital requirements. The current version of the concept is called innovative Tier 1 capital. It is attractive because although treated for regulatory purposes as equivalent to equity it is nevertheless regarded for tax purposes as debt and in principle the coupons are therefore deductible.
To achieve this the notes/bonds are in substance a hybrid of debt instrument and preference share....
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: