HMRC has published a short paper which updates its position on hybrid capital instruments. The paper accepts that such instruments, though ‘perpetuals’, constitute debt and therefore come within the loan relationships regime. It also offers further analysis on the application of current law to the next generation of hybrid capital, to be issued under a new regulatory regime that will start taking effect on 1 January 2013. This is problematic and banks and insurers that would like to issue such capital will be monitoring developments closely, in particular the draft regulations expected in the autumn.
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