In Leeds Design and Innovation Centre v HMRC (TC 03150 – 20 December 2013) the issue was whether the benefit of loans granted to employees and directors under discount loan agreements (the ‘Discount Agreements’) should be taxed as emoluments (under ICTA 1988 s 160 and later ITEPA 2003 s 175) as no interest was paid for the relevant years of assessment or whether the fact that a sum described as a discount was due at the end of the term took the arrangements outside the charge to tax. The discount element was calculated by reference to LIBOR plus 2% on a compounding basis on the amount of the loan for every complete year of the loan.
The tribunal considered (applying Lomax v Dixon [1943]1 KB 671) that ‘a payment which contains no element other than a LIBOR based return which is differentiated from interest only because...
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