Avoidance schemes have been notified to HMRC that exploit provisions under which individuals may claim relief for interest payments on loans used to invest in partnerships or small companies. Legislation will be introduced in the forthcoming Finance Bill to stop individuals exploiting these provisions for the purposes of tax avoidance.
The new measure will deny relief for interest if the loan is made as part of arrangements that are certain to produce a profit for the investor by virtue of the interest being eligible for relief. It will not affect genuine commercial investments in business where there is uncertainty as to the return that will be produced from the arrangements.
A copy of the draft legislation is available here
A copy of the draft explanatory notes are available here