Taxation (International and Other Provisions) Act 2010 section 468

Debts with same rights where unrelated parties hold more than 50%

Section 468 provides that a loan between related parties within a worldwide group is not treated as a related-party loan for the purposes of the corporate interest restriction rules, where at least 50% of the debt (carrying identical rights) is held by unrelated creditors.

• Where a company borrows under a loan relationship and one creditor is a related party, the related-party status is disregarded if unrelated creditors hold at least 50% of the total debt on the same terms
• The debtor and the related-party creditor are treated as if they were not related parties for the entire period, meaning the loan escapes the related-party restrictions in this Part of the Act
• Creditors are not regarded as having the same rights if the loan terms differ between persons, if arrangements exist that could cause rights to diverge, or if any other circumstances mean the rights are not substantively identical
• "Arrangements" is defined broadly to include any agreement, understanding, scheme, transaction, or series of transactions, whether or not legally enforceable