This is a major loose-leaf work, now being re-launched and rewritten by new authors, on all aspects of interest payable by both individuals and corporate entities. In that regards it must be one of the most comprehensive authorities on the subject currently in the market place.
Anyone doubting that sweeping remark need only look at the extensive sections dealing with historic material e.g. mortgage interest relief at source, which in many other works would be lost into an old edition but are retained here. Of course the work commences right at the ground floor with the chapter on ‘What is “interest”?, including the well known definition in Bennett v Ogston 15 TC 374: ‘payment by time for the use of money’. Just a quick glance through the chapters reveals the breadth of the task which the authors faced, including grappling with the statutory override treating interest as a distribution, manufactured interest, Islamic finance, anti-arbitrage, the debt cap, transfer pricing, derivative contracts and securitisation companies, to give just a few examples. Statutory references are helpfully given to both the pre-rewrite legislation and (in what is likely to be a ‘first’) the final rewrite Acts, the CTA 2010 and T (IOP) A 2010.
The core of the work, however, is an extensive chapter on loan relationships in the corporate field which takes a novel and user-friendly approach to integrating discussion of accounting practice with an analysis of the legislation. Anyone wanting a detailed explanation of all the relevant provisions will find this chapter an invaluable resource.
The notorious provisions of CTA 2009, ss 441 to 442 (loans for unallowable purposes) are fully reviewed in this chapter with HMRC’s published statements also set out, although I did wonder whether the authors found HMRC’s reasoning persuasive or not.
In the private client context I was interested in the review of the rules relating to deeply discounted securities and premium; in particular where the loan is interest free and the premium is in the form of an amount geared to an index. This type of scenario is common in the context of inheritance tax planning arrangements. It is often argued that a premium of this nature is capital and not interest, which I have always been sceptical about and the authors of this work seemed to share my view.
The style is very clear and concise and the reader has no difficulty in researching points via ‘Key points’ ( ‘Recent developments’ or the index) and quickly finding the authors’ conclusions on a particular issue. There are also lively and unusually informative footnotes. The approach taken throughout is to explore how the law (and accounting practice) has developed over time, and this provides the foundation for an explanation of the current position; the authors also have a weather eye open to issues on the horizon such as the arrival of IFRS 9.
Some may find the style overly concise and may in some parts prefer more detailed analysis but that would risk fogging the text and turning an already substantial volume into a massive tome. In a future edition the authors might usefully include some more practical examples to illustrate points made, but all in all this book must be thoroughly recommended as a comprehensive guide to its topic.
Taxation, 6th May 2010