Chancellor to close loan avoidance scheme

A loophole that allows banks and large businesses to cut the cost of loans
through a tax dodge is to be slammed shut by chancellor Gordon Brown.

New legislation is to be introduced into the finance bill at report stage
that will stop companies using avoidance schemes to gain tax relief on the
principal a loan, as well as the interest.

The City fears the move may herald a crackdown on the tax-driven activities
of the structure finance industry, according to the Financial Times.

HM Revenue & Customs has indicated that potentially billions of pounds
were at stake from the move.

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