In March 2012 the UK tax authorities, HM Revenue & Customs (“HMRC”), published a consultation document proposing significant changes to the rules requiring UK tax to be withheld from interest. This included, among other things, proposals to disapply the quoted Eurobond exemption – that allows interest on listed debt securities to be paid free of UK withholding tax – in the case of certain intra group transactions, and to remove the rule that allows UK source interest to be paid free of UK withholding tax where it is “short” interest, i.e. payable on a debt with a term less than a year. HMRC have released a summary of responses to the consultation document, together with the UK Government’s revised proposals. The revised proposals represent a significant U turn in some key areas; most notably, the UK Government no longer intends to implement the proposals relating to the quoted Eurobond exemption or on short interest. Further details are provided below.
View full memo, "UK Tax Authorities Perform U-turn on Possible Changes to UK Withholding Tax Rules; Quoted Eurobond Exemption to Remain Unamended for Now"