The claiming of corporation tax relief can be a complex issue.
It can depend on the initial purpose of the loan, the relationship of the loan provider, the use of the loan and the operations of the borrower.
Interest incurred wholly and exclusively for the purpose of a trade by a borrower is allowable as a trading expense under Section 81 TCA 1997. This will include interest incurred for capital expenditure where it is used wholly and exclusively for a trade purpose. Also it will include interest incurred to purchase and repair a premises to rent.
Advice should always be sought in more difficult areas e.g. where a company borrows funds to lend to a subsidiary or to purchase shares in another company or a group restructure is planned or existing loans are being refinanced.
Addressing these issues after the event can be costly.