SWAP compensation payments

SWAP compensation payments

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Client is due to receive a SWAP claim shortly made up of the following:

i)                    Monthly hedging premiums paid

ii)                   Additional interest above loan rate

iii)                 Amounts to buy out

And ‘loss of earnings’ as a result of

i)                    Normal return on capital employed

ii)                   Resource used in calculation the claim

iii)                 Costs

Just having difficulty in find any clarification on HMRC or other sources on what parts are/aren't taxable. Client received tax relief on the cost and buyout so expect the majority to be taxable. Any thoughts or experience in this area?

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By mjshort
30th Apr 2014 12:21

IRHP

Although I have enormous amounts of experience with the products (Swaps, Options, Futures etc..) we are still waiting for any HMRC involvement with the tax.

We have split ours up into segments:

We have 'reversed' out the previous taxable position for the product claim. So how did you account for the  'hedging premiums'- presumably the difference between the fixed rate and the floating rate?

 

Interest- Just treated as bank interest.

Treating  the rest like an Insurance claim.

 

As a further point- have you had any luck claiming your costs?

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