HMRC has commented that, despite concerns expressed in a number of enquiries, the guidance in Statement of Practice (04/07) still reflects its continued position on Advance Thin Capitalisation Agreements (ATCAs).
An ATCA allows a company to enter into a forward agreement with HMRC setting out the terms on which HMRC will accept that the company's interest payments represent an arm's length cost of borrowing for a period of (usually) three to five years. They can be used by companies who borrow from (or with the support of) a connected party.
[16/04/08]