On 28 August 2014 HMRC updated its guidance as to who is responsible for deducting tax at source on interest payments following the transfer of loan receivables.

According to the updated guidance:

  • where a loan receivable is transferred by a lender to another person, and the original lender retains the legal title, the underlying borrower is often unaware that there has been any change in the beneficial ownership. In such cases HMRC will look to the original lender, as the “last” payer of interest, to discharge any obligation to deduct tax at source on the interest payment
  • HMRC will look at the beneficial owner, in determining the place of abode of an interest recipient

To view the revised guidance, click here.