Both sides of the story on eurobonds

The Independent ran a series of articles last week about the taxation of UK companies mainly those owned from overseas and particularly those owned by private equity funds. The complaint seems to be that the UK companies are paying little UK corporation tax because most of their trading profits are offset by interest paid on loans put in place when the companies were acquired. In addition the interest is paid out without withholding tax by using the ‘quoted eurobond exemption’ using loan instruments quoted on the Channel Islands stock exchange.

There are two pieces of tax policy here to be debated and for everyone to take a view on what the law should be. The first is the wide question of whether interest on debt used to acquire a company should...