INTM572070 - Thin capitalisation: an overview of thin cap work: Request for renewal of a thin capitalisation agreement

In the past, because of the link between them, thin cap agreements tended to run in parallel with periods of treaty clearance, so that both came up for renewal every 3-5 years. Treaty clearances are now dealt with separately, and their duration is more likely to mirror the term of the loan(s) involved than to fit in with the terms any thin cap agreement. Treaty clearances may therefore be longer in some cases, while thin cap agreements will generally run for 3-5 years, less if appropriate.

“Renewal” suggests a minimal change in circumstances since the last agreement was concluded, which is highly unlikely. It may be reasonable to effectively “renew” an agreement where there is little reason to amend the terms, but all aspects of the old agreement should be reviewed and their continued relevance tested. A “renewal” is not an opportunity to skimp on the ATCA process’s information requirements (INTM573010). If nothing else, the economy and the lending markets change profoundly over a period of far less than five years.

It may be appropriate to discuss a more limited information/documentation provision than the comprehensive requirements set out in INTM5773050.

Whatever the extent to which the agreement is treated as renewed rather than made afresh, the form will be that of an Advance Thin Capitalisation Agreement, made under FA99/S85-S87.