Modernising the taxation of corporate debt and derivative contracts

At Budget 2013, the Government announced a review of the rules governing the taxation of corporate debt (loan relationships) and derivative contracts with the aim of redesigning them to be simpler, clearer and more resistant to tax avoidance; this consultation forms part of that process.

The Government invites comment on the proposals made and on their commercial and fiscal impact on businesses.

Open meeting

As part of this consultation, and as announced in the consultation document, HM Revenue and Customs held an open meeting on 27 June 2013 to explain the consultation process and to assist stakeholders in engaging with it. The slides presented at the meeting can also be found below.

Working groups

Four working groups of representatives from businesses, business advisers and other stakeholders have been established as part of the wider consultation process to discuss options and proposals in more detail. Minutes from the working groups are being published online.

The working groups have the following remits, based on the chapters of the consultation document:

Working Group 1

• Chapter 3 - The Framework
• Chapter 4 - Looking behind the accounts
• Chapter 6 - A unified regime for loan relationships and derivative contracts
• Chapter 14 - Anti-Avoidance measures

Working Group 2

• Chapter 7 - Connected part debt
• Chapter 8 - Intra-group transfers
• Chapter 9 - Partnerships and transparent entities
• Chapter 11 - Debt restructuring

Working Group 3

• Chapter 5 - Accounting issues
• Chapter 10 - Exchange gains and losses and hedging
• Chapter 12 - Hybrids and special treatment instruments

Working Group 4

• Chapter 13 - Bond funds and “corporate streaming”