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HMRC internal manual

Savings and Investment Manual

From
HM Revenue & Customs
Updated
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Relief for interest paid: arrangements minimising risk to borrower: arrangements producing a broadly compensatory amount

Arrangements producing a broadly compensatory amount

Sub-sections (5) and (6) ensure that the legislation will still apply if the arrangements include provision to secure that, in the event of a post-tax advantage not being produced, an amount not significantly less will still arise.

Thus the legislation will still apply if the arrangements gave rise to a 30% (more than insignificant) chance of a post-tax advantage not being produced if in that event the investor is still certain to receive an amount not significantly less. This reflects the fact that an avoider may be willing to live with significant risk of a trivial loss if the alternative outcome is a significant post-tax profit.