Debt waivers in cross-border restructuring: Problems with the UK’s anti-hybrid legislation

Recent changes to UK tax law appear to have resulted in a stealth increase to the number of situations in which a release of loans in cross-border restructuring scenarios can be taxable in the UK. The date on which a loan was entered into or drawn down now appears to have a material effect on the UK tax treatment on its release (potentially making the difference between that release giving rise to taxable income or not in the UK). It is not clear whether these changes were deliberate, or are simply a by-product of oversight and several otherwise unrelated changes to UK tax law. Absent a change in law, the likelihood of cross-border debt releases giving rise to UK tax charges will increase with the passage of time. Read more.

This article first appeared in the August 2018 edition of Corporate Rescue and Insolvency.