Taxes Consolidation Act 1997 section 817A

Restriction of relief for payments of interest

Section 817A is an anti-avoidance provision that denies tax relief for interest payments under Part 8 where the sole or main benefit of the arrangements is to obtain a reduction in tax liability.

• Interest relief under Part 8 (including interest treated as a charge on income) is denied where a scheme or arrangement has been effected and the sole or main benefit expected to accrue from the transaction is a reduction in tax liability.
• The restriction applies to all forms of interest relief available under Part 8, whether claimed by individuals or companies.
• Where interest treated as a charge on income is surrendered under group relief (section 420(6)), the question of whether a tax reduction benefit arises is determined by reference to the claimant company and the surrendering company taken together.
• The provision targets arrangements where the dominant purpose is tax reduction rather than any genuine commercial objective.