Late interest between connected parties
HMRC have published new guidance on the revised loan relationships legislation introduced in Finance Act 2009 and relating to late payments of interest between connected companies.
The guidance is divided into four sections and applies for accounting periods beginning on or after 1 April 2009.
- Connected persons and late interest.
This section provides additional details on when the late interest rules will apply i.e. where a creditor is a company resident in a non-qualifying territory. This section further defines ‘resident’ and ‘non-qualifying’ for the purposes of the late interest rules.
- Transition to the new rules.
This section includes details of how corporate groups can re-arrange inter-company loans using an election to use the “paid basis”. Elections can be made for accounting periods ending on or before 31 March 2011.
- Multi-investor partnerships.
This section explains the situation if a UK company receives funding from a multi-investor fund. This section is subdivided and explains the application of the new rules where the Company partner is a connected company or a major interest company and where the Company partner is a participator.
- Deeply discounted securities.
This final section looks at the amended rules for the postponement of debits for discounts on securities issued by connected and close companies, for accounting periods beginning on or after 1 April 2009