There are two main taxation aspects for Newco to consider during the transaction.
The first is the timing and deductibility of interest payments to facilitate the transaction and secondly, the future timing and amounts of corporation tax payments.
Interest payments in a management buyout
The transfer pricing legislation1 can result in part of the interest costs arising on funding the transaction being non-deductible for corporation tax purposes. Broadly, the rules apply to financing arrangements if a number of persons act together in relation to the financing arrangements of a business, and collectively those persons would be capable of controlling the company.
Where the transfer pricing rules do apply, HMRC looks at the amount of debt and the
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Web page updated on 17 Mar 2025 17:18