INTM572050 - Thin capitalisation: an overview of thin cap work: Information from treaty claims

As indicated in INTM572010, the receipt of a treaty claim can no longer serve as the trigger for a thin capitalisation enquiry. However, notification that a significant loan has been cleared for treaty purposes by the DT Treaty Team, now located at LBS Nottingham, may serve as early notice of a change in the borrower’s funding structure. This can provide an opportunity to start gathering information from sources other than the taxpayer on the facts and circumstances surrounding the transaction for when the return covering the period of the transaction comes in.

Advance thin cap agreements are now covered by the advance pricing agreement legislation, and can only be initiated by a company requiring certainty in relation to the application of Schedule 28AA to its financing. HM Revenue and Customs initiated enquiries may be taken up once the return is received. See INTM572010.