Income Tax Act 2007 section 564P

Tax relief schemes and arrangements

Section 564P ensures that anti-avoidance rules restricting tax relief for interest payments also apply to alternative finance return.

• The anti-avoidance provisions in section 809ZG of ITA 2007, which target schemes and arrangements designed to obtain tax relief, apply equally to alternative finance return as they do to conventional interest.
• Alternative finance return is the profit or return paid under Sharia-compliant and other alternative finance arrangements, which functions economically like interest.
• Where a scheme or arrangement has been entered into primarily to obtain tax relief on alternative finance return, HMRC may restrict or deny that relief under the same rules that apply to interest.
• This provision prevents taxpayers from using alternative finance structures to circumvent the anti-avoidance rules that would otherwise apply if traditional interest-bearing finance had been used.