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HMRC internal manual

International Manual

HM Revenue & Customs
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DT applications and claims - Types of income: Interest

Privately Arranged Loans: Non-company lenders

You may receive a claim involving a loan between a non-resident individual and a UK company that appears to be a private arrangement. For example it is not a loan from a bank or a holding of a loan stock that is traded on a stock exchange, but is a loan made under an agreement between an individual overseas and a UK resident company.

In these circumstances, you should write to the Tax Office for the UK company paying the interest enclosing a copy of the loan agreement and say that our concern is to establish that treaty benefits are available to our claimant.

You should ask

  • If the Tax Office considers that tax is deductible from the payments that are due to our claimant (the individual making the loan).
  • Has the Tax Office any evidence to suggest that there may be a “special relationship” between the UK company and the individual making the loan.
  • If, by reference to the instructions at INTM571000 onwards, the Inspector has any general concerns about the financing structures of the UK company.
  • If so, will the Tax Office consider if the provisions at ICTA88/Sch28AA might apply to the loans.