Hargreaves Property Holdings v HMRC

In Hargreaves Property Holdings Ltd v HMRC [2021] UKFTT 390 (TC) (2 November) the First-tier Tribunal (FTT) decided that the interest had a UK source because the borrower was UK tax resident and UK assets and profits funded the interest payments. Further the interest was yearly interest because although the loans were repaid within a year they were replaced by the same lenders with loans of the same or greater amount.

Hargreaves was the UK tax resident parent of a group engaged in UK property investment for which funding was provided in the form of loans. These loans were restructured in 2004 for tax purposes. Before the refinancing the loans generally remained outstanding. After the refinancing:

each lender assigned its right to interest to a Guernsey resident entity shortly before it was due and its right to the principal to another group company; and from 2012 after...

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