Certain problems with contingent debt

Various tax issues can arise where debt is subject to non-standard terms as to the payment of principal and/or interest. After several years of uncertainty, HMRC’s latest attempt at resolving these issues in the context of regulatory capital is very much to be welcomed. But there is further work to do for bank issuers, and for insurers the work is yet to begin. At the same time, banking legislation published last month poses a new challenge for HMRC which could reach well beyond the confines of regulatory capital.