»Ê¹ÚÌåÓýapp

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

»Ê¹ÚÌåÓýapp anti-avoidance rules can apply to a scheme that is part of a larger scheme

»Ê¹ÚÌåÓýapp borrowing arrangements of a multi-national group can be very complex. »Ê¹ÚÌåÓýapp question of whether those borrowing arrangements, or just part of those arrangements, make up a scheme may not have a simple answer. »Ê¹ÚÌåÓýapp structure of the borrowing arrangements may mean that there are a number of schemes. Particular transactions may be present in more than one scheme. Schemes may overlap or there may be schemes within schemes.

»Ê¹ÚÌåÓýapp focus should be on the transactions, etc. that make up the scheme that is intended to frustrate the debt cap measure rules.

Consider a multi-national group that has just concluded the takeover of another multi-national group:

• »Ê¹ÚÌåÓýapp target group acquisition is funded initially by syndicated bank debt, which is then largely replaced with a number of corporate bonds.
• Some existing bank debt of the acquiring and target groups is retired.
• »Ê¹ÚÌåÓýapp existing UK holding company borrows intra-group to acquire some of the target group subsidiaries.

As part of the acquisition finance, one of the corporate bonds is issued by an overseas group company in a weak currency with a high interest rate. Other financial instruments are entered into by other members of the group which reduces, in substance, the cost of borrowing in the weak currency. One would expect the main purpose of using the weak currency corporate bond to be to increase the available amount for the UK members of the group.

»Ê¹ÚÌåÓýapp borrowing arrangements in their entirety, including the external and intra-group arrangements, form a scheme. »Ê¹ÚÌåÓýapp principal purpose of that scheme is to acquire another group. However the arrangements involving the weak currency corporate bond also form a scheme and one of main purposes of that scheme is to increase the available amount.