CFM6792 - Taxing loan relationships: structured finance arrangements: consequences for the lender

No consequences for lender

As indicated at CFM6775, the rules in section 774A to 774G have no consequence for and no effect on the lender. Cases where these provisions are expected to apply will normally involve lenders which are banks within the charge to corporation tax (so the transactions is already likely to be taxed as lending transactions on a substance over form basis) or are non-resident entities or otherwise exempt from UK tax. There may be investment companies as “lenders” but they are likely to be taxed on the basis of a discounting transaction which also means they are chargeable only on the interest element in their receipts.