On 15 November 2013, it was reported that the United Kingdom First Tier Tribunal found that the receipt of shares from a borrower in an interest free loan agreement between United Kingdom companies was taxable income. The case in which this decision was made was Versteegh Ltd. vs. Commissioners for HM Revenue & Customs (HMRC).
The tax planning arrangement engaged an interest free loan between United Kingdom groups of companies. The borrower had a responsibility to issue shares to another United Kingdom group of company. It was intended that the borrower may get relief for the accounting charge coming from the obligation to issue shares but neither the recipient of the shares nor the lender may be taxed on corresponding income. Though, the First Tier Tribunal found that, the receipt of shares was taxable under the previous Schedule D Case VI.
