UK HM Revenue & Customs on July 5 launched a technical consultation on draft regulations that allow tax deductions for interest paid on hybrid capital instruments that have a takeover or change of control clause.
The changes aim to support rules on the taxation of hybrid capital instruments, to be introduced by the government in Finance Act 2019.
The goverment believes that tax uncertainty should be removed for these instruments, which are debt but also include some features of equity. The dual nature of these instruments can lead to uncertainty about whether payments made under the hybrid instrument should be taxed as deductible interest or as nondeductible distributions.
Interested parties are asked to submit comments by August 9. A public hearing on the guidance is slated for July 12.
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