• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/15/2013

United Kingdom - Shares under interest-free loan are taxable income 

November 15: The UK First Tier Tribunal found that the receipt of shares, from a borrower in an interest-free loan agreement between UK companies, was taxable income. Versteegh Ltd. v. Commissioners for HMRC

The tax planning arrangement involved an interest-free loan between UK group companies. Under the plan, the borrower had an obligation to issue shares to another UK group company. It was intended that the borrower would obtain relief for the accounting charge arising from the obligation to issue shares, but neither the lender nor the recipient of the shares would be taxed on corresponding income. However, the First Tier Tribunal found that the receipt of shares was taxable under former Schedule D Case VI.

Read a November 2013 report [PDF 795 KB] prepared by the KPMG member firm in the United Kingdom: Weekly Tax Matters (15 November 2013)

Also included in the report are discussions of the following topics:

  • Debt cap regulations published
  • Financial institutions - Reporting of interest payments
  • CJEU update - New dates and referrals confirmed
  • HMRC 2015 guidance
  • House of Lords Select Committee on Personal Service Companies
  • Government Gateway closed 19-20 November

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