Withholding tax — a nasty surprise for UK borrowers

THE GROWTH in secondary loan trading is introducing new tax risks for UK borrowers. If loans are transferred in the secondary market to new investors that are subject to UK withholding tax, the borrower is legally liable for the tax. Not knowing about the loan sale is no excuse. Miles Walton, tax partner at Allen & Overy, and Andrew Howard, senior tax associate, explain the risks and steps that can be taken to minimise them.