Key Benefits
- Understand the definition and scope of loan relationships and money debts for corporation tax purposes
- Strengthen your ability to interpret and apply the tax treatment of corporate debt and financing arrangements in practice
- Improve your decision-making by recognising how loan relationship rules affect taxable profits and financial reporting
Do You Need to Attend This Course?
The UK loan Relationship Rules are a ‘must know’ for;
Tax professionals who are involved in the preparation or review of corporation tax computations, because loan relationships will feature in nearly every computation, and the rules are extensive and, in some cases, complex.
Training is a ‘nice to know’ for:
CFOs, FDs and FCs looking to get a greater understanding of how the tax treatment of a loan relationship can differ from its accounting treatment in many cases.
Technical Content
Part One
Definition of a Loan Relationship and Money Debt
Examples of what is and is not a money debt begins this loan relationship rules training
Examples of transactions that do not represent loan relationships
Deemed loan relationships – their importance for corporation tax and examples
Debt Securities Issued to Represent a Debt Owed to a Supplier
How does this change the corporation tax treatment? With examples
Types of Loan Relationship: Trading and Non-Trading (How to Determine Which is Which and Why the Distinction is Important)
Changes in intention concerning a loan and how this impacts its treatment in the tax computation
Examples of trading and non-trading loan relationships, credit and debit
Computational Aspects
Amounts brought into account and amounts recognised later or not at all
Consideration of items in P&L, other comprehensive income and shareholders’ funds
Examples of items that might be found in different parts of the financial statements are covered when assessing the UK loan relationship rules
Dealing With Non-GAAP Accounting Treatments of Loans
Accounting materiality versus HMRC materiality
Deferred tax implications
Examples of non-UK GAAP treatment of loan issue costs
Dealing With Accounts Prepared Using Foreign GAAP
Adjustments that might be needed to comply with UK corporation tax law
Whether deferred tax is needed or not
Example of a UK branch using foreign GAAP in the accounts, which it prepares
Capitalised Interest and When it is Brought into Account for Tax Purposes
‘GAAP taxable’ assets – what they are and why it matters
Non-GAAP taxable assets – how interest capitalised into the cost is treated for corporation tax purposes
This loan relationship rules session covers examples: Involving the construction of a building
Involving the development of software for internal use
A development property intended to be sold
Perpetual Debt Issues
Accounting treatment – debt or equity?
Possible adjustments required where the accounting treatment might be to treat it like share capital
Connected Company Loan Relationship Issues
Definition of a connected company
Definition of amortised cost pre-and post-2016
Write off or release of debt and its implications for the lender and the borrower
Examples of connected company loans made in accounting periods beginning before 1 January 2016, and the possible tax adjustments required for both lender and borrower
Example of connected company loans made in accounting periods beginning on or after 1 January 2016 between UK companies
Connected Company Loan Release or Write-Off: Including Accrued Interest
Part Two
Late Paid Interest Rules
What they are and when they apply
Examples where the rules will and will not apply
Deferred tax implications
Impact of Transfer Pricing Rules on Connected Company Loan Write-Off
When transfer pricing adjustments might be needed for loan relationships
The impact on the corporation tax computation based on the figures in the financial statements
Examples involving different types of transfer pricing adjustments, such as Thin Capitalisation Rules
Non-market rates of interest are being charged
The ‘Unallowable Purposes’ Rule
What is an unallowable purpose?
What adjustments are needed if the rule applies
Examples of different scenarios where the unallowable purposes rule can apply
Recent case law decisions
Dealing with Non-Trading Loan Relationship Deficits
How the ‘loss’ can be relieved
Pre- and post-1 April 2017 deficits
Close Company Issues
Loans to participators
Treatment when the loan is forgiven or written off (for both the company and the participator)
Does being an employee or officer as well as a participant make any difference?
Non-Market Loan Anti-Avoidance Rules
Loans involving individuals or certain non-resident companies which are not at a market rate
Adjustments required
Examples of where the anti-avoidance rules operate
Examples of where the anti-avoidance rules do not operate
Notional Interest Expense and Income
Interest that isn’t interest for the UK loan relationship rules
Items to look out for in the P&L that do not fall under the LR rules
Examples of possible adjustments Pension costs
Discounted provisions
Others
Tax Issues Around Convertible Debt
Differences caused by using either FRS 102 or IFRS 9 for the accounting treatment
Bonds convertible to a fixed number of shares
Other situations involving convertible securities
Possible disallowance of interest on the bonds
Chargeable gains implications of redemption, conversion or cancellation
Examples of debt convertible into a fixed number of shares under UK GAAP and IFRS
Examples of debt convertible into a variable number of shares – the difference it can make, depending on which GAAP is used, concludes loan relationship rules training
Training Objectives
The UK Loan Relationship Rules in Practice at Redcliffe Training identifies the source of the law to enable personal research.
Participants will understand the fundamental principles of the taxation of loan relationships ‘debits’ and ‘credits’.
Sessions spot where GAAP has not been followed, and making suitable adjustments.
Training identifies deemed loan relationships and their impact on the corporation tax computation.
We’ll cover when anti-avoidance rules operate and the adjustments this can lead to.
This course establishes the adjustments needed where loans are made between connected companies.
Participants will understand and apply the tax treatment applying to convertible debt under both UK GAAP and IFRS.
Training Course Summary
Sessions at Redcliffe Training help attendees understand when companies might need to adjust their corporation tax computations for the loan relationship rules. Delegates will understand the different situations in which adjustments can be required and see examples to apply the rules correctly. The importance of considering the impact of connected company loans is emphasised. Sessions assess whether accounts have been properly prepared following generally accepted accounting principles. Delegates will appreciate the various anti-avoidance rules that exist so that they can determine whether they apply to transactions that have been undertaken by the company under review.
Your trainer
Course Trainer · 9 yrs experience
- Corporate Tax Courses
The Loan Relationship Rules in Practice at Redcliffe Training is delivered by a Director of a consultancy company specialising in taxation, share scheme advice, reward and lecturing. He has developed a specialised share scheme service for small companies and advises FTSE companies on communication. Sessions cover most aspects of Direct Taxation with particular interest across employment taxation and transfer pricing. Both of which pose unusual conceptual challenges.
Before this, he worked for Henderson for nearly 9 years, leading the Share Schemes team for part of this time.
Delivering the UK loan relationship rules at Redcliffe, this specialist took the level 7 CIPD Master's qualification whilst at Henderson. Before Henderson, he was with Australia Mutual Provident (AMP) and helped set up one of the first Share Incentive Plans (SIP) for large companies in 2001. It was so unusual at the time that the Revenue phoned him up to find out how they could encourage more large companies to adopt SIP.
This professional began his career in taxation and, for the following 16 years, worked in three of the “Big Four” accountancy firms. This loan relationship rules training lead became a Senior Manager with Deloitte & Touche, having worked on issues such as profit-related pay, share schemes, expatriate tax, tax investigations, reward management, US taxation, transfer pricing and corporate tax.
Reviews
No reviews yet for this course. Check back soon.
FAQs
Frequently asked questions for this course will appear here soon.