Section 56 Finance Act 1983
Section 56 of the Finance Act 1983: A Look at Loan Relationships
Section 56 of the Finance Act 1983, while now largely superseded by later legislation, played a significant role in shaping the tax treatment of loan relationships in the United Kingdom. Its primary aim was to prevent tax avoidance schemes that exploited loopholes in the existing rules concerning interest payments and receipts. Specifically, it targeted schemes that sought to artificially create deductions for interest expenses while avoiding corresponding taxation of the interest income.