Bridget English (Gibson, Dunn & Crutcher) examines HMRC's consultation and draft guidance.
The differences between LIBORs and RFRs and the potential tax risks arising from benchmark reform have been touched upon previously in this journal (see ‘Tax implications of LIBOR discontinuation’ (Bridget English & Richard Sultman) Tax Journal 28 March 2019). Nevertheless the launch of a consultation and the publication of draft guidance by HMRC merit a return to the topic.
By way of brief reminder RFRs differ from LIBORs in two key ways: they are overnight rather than term rates; and they do not contain a credit-spread. Therefore in addition to replacing the relevant LIBOR adjustments will be needed to minimise changes to the existing economics:
RFRs will need to be compounded over the relevant interest period; and
to prevent value-transfer it will be necessary to either (i) add...
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Bridget English (Gibson, Dunn & Crutcher) examines HMRC's consultation and draft guidance.
The differences between LIBORs and RFRs and the potential tax risks arising from benchmark reform have been touched upon previously in this journal (see ‘Tax implications of LIBOR discontinuation’ (Bridget English & Richard Sultman) Tax Journal 28 March 2019). Nevertheless the launch of a consultation and the publication of draft guidance by HMRC merit a return to the topic.
By way of brief reminder RFRs differ from LIBORs in two key ways: they are overnight rather than term rates; and they do not contain a credit-spread. Therefore in addition to replacing the relevant LIBOR adjustments will be needed to minimise changes to the existing economics:
RFRs will need to be compounded over the relevant interest period; and
to prevent value-transfer it will be necessary to either (i) add...
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:
