Q&A: Court of Appeal in Hargreaves Property Holdings Ltd v Revenue & Customs

The Court of Appeal (CA) has dismissed the taxpayer’s appeal in Hargreaves Property Holdings Ltd v Revenue and Customs [2024] EWCA Civ 365 agreeing with the First-tier Tribunal (FTT) and the Upper Tribunal (UT) that the company should have withheld UK income tax from interest payments on loans from overseas lenders.

Why wouldn’t tax have needed to be withheld?

The company originally put forward several reasons why the UK’s withholding tax (WHT) rules didn’t apply but by the time the case reached the CA these had been narrowed down to saying that this was because the payments were not ‘yearly interest’ and/or a UK resident company was ‘beneficially entitled’ to the interest.

But weren’t the lenders overseas?

Yes but following tax planning advice various arrangements had been put in place for the periodic refinancing of the loans. In many cases these involved the right...