Tax Treatment of Redress or Compensation for Mis-sold Interest Rate Hedging Products – May 2016

HMRC has formally advised R3 that, following internal legal advice, its view is that tax arising on redress or compensation in relation to interest rate hedging product miss-selling constitutes a debt that falls within Insolvency Rule 13.12, for which HMRC is entitled to prove within the insolvency and not a necessary disbursement of the insolvency. However each case should be reviewed in relation to the specific facts as these may impinge on the tax treatment.