Corporation Tax – Debt buy-back rules
The Government intends to make further changes to the loan relationships rules on debt buy-backs. This relates specifically to the rules on how groups of companies are taxed when they buy back their issued debt at a discount to the amount borrowed. Thisannouncement was made to target groups of companies that may have been able to avoid the intentions of an earlier announcement last month.
This latest change will apply to releases of debt that occur on or after 9 November 2009 in relation to any debt that was subject of a debt buy-back occurring on or after 14 October 2009 and to which the proposed legislation announced on 14 October 2009 will apply.
HMRC have published draft legislation in respect of the 14 October and 9 November 2009 announcements by the Financial Secretary to the Treasury. The draft legislation also contains transitional provisions relating to debt restructurings begun but not completed before 14 October.