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The CIR and related party guarantees: a case study for a privately owned UK group

Robert Langston (Saffery) provides a practical case study on the operation of the corporate interest restriction where related party guarantees and withholding tax issues are involved.

This article is not a comprehensive overview of the Corporate Interest Restriction (CIR) rules but it does cover some of the basic principles as well as the practical implications of related party guarantees and an associated issue which arises in relation to withholding tax.

The CIR is becoming more of an issue for smaller privately owned UK groups for a number of reasons: interest rates are going up so the £2m de minimis interest expense is frequently exceeded; debt continues to be readily available and many family offices have an appetite for making leveraged investments; and lenders often look for related party and personal guarantees where the group is privately held and they can identify other parties who can give...

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