INTM522020 | Thin capitalisation: practical guidance: third-party loan agreements: syndicates of lenders

So that no single lender is too exposed to the risk of default, lenders may form a syndicate to provide the funds for a large loan. Syndicate members are often resident in the same country, but that is not always the case. Syndicated loans are normally made by third-party lenders, although there may be guarantees from connected parties which bring the financing within the ambit of Part 4 of TIOPA10.

When the syndicate is providing a loan for a UK group or company and at least one of the syndicate members is resident overseas, then an application for treaty clearance to the DT Treaty Team at LBS Nottingham (previously at CAR Residency) may need to be made. If the syndicated loan has a syndicate manager, then it may be dealt with under the Syndicated Loan Scheme.

If there is no syndicate manager, each foreign member of a syndicate will need to apply for treaty clearance to receive interest gross or at the treaty rate.