12 October 2006
I act for a proprietary limited company (a family-owned company) resident in Australia and not resident in the UK. The company purchased the long lease of a residential flat in London in January 2005 and borrowed 100% of the cost from another family-owned Australian non-UK resident connected company which charges what it considers to be a commercial rate of interest.
For 2004-05, the loan interest paid is the largest single item of expense. No disclosure was made to HMRC's Centre for Non Residents that interest was paid to a connected non-resident company.
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