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Withholding tax: Hargreave-ances

Deepesh Upadhyay and Sean Wright (Eversheds Sutherland) review the Upper Tribunal’s decision in Hargreaves which considers withholding tax and interest payments.

The Upper Tribunal (UT) in Hargreaves Property Holdings Ltd v HMRC [2023] UKUT 120 (TCC) rejected the taxpayer’s appeal against the First-tier Tribunal’s (FTT) decision that tax should have been withheld on interest paid on loans made to the group.

In reaching its decision the UT explored a number of concepts which will be welcomed by tax practitioners. This should provide guidance and authority in respect of UK withholding tax issues and practice which are relevant for various types of finance arrangement.

Background to the case

The case concerns a UK resident taxpayer and the ultimate parent company of a UK property group Hargreaves Property Holdings Ltd (Hargreaves) which had historically obtained interest-bearing unsecured loan financing from connected overseas lenders to fund the...

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