• Service: Tax, Global Indirect Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 9/20/2013

United Kingdom - Limiting compensating adjustments on shareholder loans proposed 

September 20: The UK government has proposed anti-avoidance measures aimed at restricting the use of the compensating adjustments mechanism when it would generate unintended income tax advantages.

The measures would target two areas:

  • Interest on debt between individuals and “excessively” leveraged companies and / or excessive rates of interest
  • Companies that are under remunerated by partnerships for services provided (such as the provision of staff)

The proposals therefore would affect interest on shareholder loans to companies (current rules allowing for recipients to claim a compensating adjustment on the disallowable element of the interest) and partners using service companies within their operating structure.

Read a September 2013 report [PDF 120 KB] prepared by the KPMG member firm in the United Kingdom: Weekly Tax Matters (20 September 2013)

Also included in the report are the following topics:

  • First annual tax on enveloped dwellings returns due 1 October 2013
  • VAT: UKFTT 467 - TLLC Ltd
  • VAT: Place of supply changes 2015
  • Double tax agreements – Draft statutory instruments

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