Is it a debt or a loan for tax purposes?
In an article published in Financial Instruments Tax and Accounting Review, Eloise Walker of Pinsent Masons considers what you need to do to ensure that a debt is a loan relationship for corporation tax purposes so that tax deductions can be obtained, following the Upper Tribunal decision in the case of MJP Media Services.
This is a particular issue in M&A transactions when buying a target company which owes its parent cash. The buyer will usually pay cash to the seller directly to repay the loan on behalf of the target. The article considers what you need to do to make sure that the new debt owed by target to buyer is a loan relationship.