On 29 July 2008, HMRC issued a consultation paper on proposals for reform of the late payment of interest rules in the loan relationships regime. Under the current rules, a debtor may suffer deferral of tax relief for late paid interest on connected party debt where the creditor is not subject to the loan relationship rules (such as where it is non-UK resident). The proposals include extending this deferral rule to all connected party debt or replacing the rule with an anti-avoidance provision. This consultation will be of particular interest to groups of UK companies as they are, broadly, not subject to the current deferral rule but may suffer deferral under the proposals.