International Manual

INTM413170 - Transfer pricing: the main thin capitalisation legislation: Interaction between claims by lenders and guarantors

Interaction between TIOPA10/S182 and TIOPA10/S192 claims

There are occasions, provided for by TIOPA10/S193(2), where:

• a guarantor makes a TIOPA10/S192 claim, and
• a lender makes a TIOPA10/S182 claim

in relation to the same security.

If this is the case, TIOPA10/S193(3) and (4) operate to ensure that there is parity between interest deductions and receipts so that the thin cap disallowance and related compensating adjustment claims match.

TIOPA10/S193(3) applies where the guarantor claims first. In this case, the lender바카라 사이트™s claim is not refused, but the lender is treated as not only receiving the adjusted (decreased) amount of interest income from the borrower as corresponds to the borrower바카라 사이트™s adjusted interest deduction, but will also be treated as receiving (increased) taxable amounts corresponding to those deductions claimed in the guarantor바카라 사이트™s computations.

Under TIOPA10/S193(4), if the lender claims first and makes no adjustment under S193(3) above, the guarantor바카라 사이트™s claim to those deductions is disallowed. This means that in those circumstances the guarantor can only get a deduction for payments that the lender recognises as taxable.