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HMRC internal manual

International Manual

Foreign tax paid on trade income: limitation on credit: 1998 legislation: Expenditure not readily identifiable

The circumstances in which the financial expenditure in respect of a particular loan can be readily identified are likely to be few. Where, as generally happens, the financial expenditure cannot be readily identified, ICTA88/S798(8), and ICTA88/S798B(3) for income within the 1998 legislation, provides that the cost of financing the loan or earning the income shall be such sum as is `just and reasonable’, having particular regard in the case of interest income to the market rates used in setting the interest payable.