Relief is due

In 2002 2003 and 2007 the taxpayer took out loans on 30-year terms from finance companies controlled by B.

He invested in property investment companies also controlled by B and made payments to B’s finance companies that were equivalent to the full interest due on each loan.

He claimed tax relief on the payments under TA 1988 s 353. HMRC refused the claim.

The taxpayer appealed saying there was no requirement in the legislation that interest be paid periodically in arrears and tax relief should be allowed on payments that were simply in advance of interest.

The First-tier Tribunal said the payments amounted to interest. The sums were calculated according to the terms of each loan. The fact a discount had been used reflected the interest being paid early rather than spread over the period of the loans.

The judge agreed that the payments...