Withholding tax after Perrin and Ardmore

Two recent cases in the FTT deal with the question of whether loan interest paid by UK resident persons was interest ‘arising in the UK’ and therefore subject to withholding tax under ITA 2007 s 874. The cases are Perrin v HMRC [2014] UKFTT 223 (TC) and Ardmore Construction Ltd v HMRC [2014] UKFTT 453 (TC). The essential facts in both cases were:

• the interest was paid by a person resident in the UK (Mr Perrin lived in Essex and Ardmore’s only place of business was in the UK) to a non-UK lender;
• the loans in question were governed by non-UK law and the parties had submitted to...