Loan guarantee fees are increasingly attracting the attention of tax authorities, in large part because of the recognition of their prospective value within groups (and therefore the potential for adjustment of tax returns). Recent years have seen credit spreads increasing with the turmoil in credit markets and, certainly until more recently, a general increase in the levels of related party debt. Taxpayers now face a high level of risk with guarantee fees since the transfer pricing treatment of them differs in different jurisdiction. A consistent group approach is advised to minimise the potential risks.
