OT22006 - Interest and Financing

OTO Commentary. Section 494. Types of Interest.

Prior to FA96 the restrictions in S494 could only be applied to annual interest not paid to a UK bank. It was therefore necessary to decide whether interest was annual or short. For accounting periods ending on or after 1 April 1996 the legislation applies to all interest arising from loan relationships as well as other charges. Grandfathering is not available ie all existing UK bank loans which did not previously have to pass S494 must be examined to see if the interest qualifies.