Tax professionals urge UK government to delay interest expense reform

The U.K. government’s timetable for implementation of a key base erosion and profit-shifting project reform is too ambitious, tax professionals have warned.

There is “no need to rush” a review of U.K. law on deductibility of interest because existing rules already limit deductibility, the Chartered Institute of Taxation said …

The proposed restrictions are likely to have “significant adverse consequences” for heavily geared infrastructure and energy projects whose viability is often reliant on tax relief for interest, said Eloise Walker, partner at Pinsent Masons LLP, in a client briefing …

The British Property Federation warned that the proposals “will particularly harm investment in capital intensive industries like real estate and infrastructure that make extensive use of debt funding …”

“The UK is introducing new rules on interest deductibility to help ensure large businesses pay their fair share of tax,” a Treasury spokesman told Tax Analysts. “These rules are in line with the recommendations from the OECD’s BEPS project and will come into force in April 2017 …”

Read more: My news story for Tax Notes, 9 August (paywall) published by Tax Analysts.