Source: http://www.legislation.gov.uk/ukpga/2009/4/part/6
Timestamp: 2020-01-25 19:51:47
Document Index: 773480684

Matched Legal Cases: ['art 6', 'art 5', 'art 4', 'art 5', 'art 5', 'art 9', 'art 16', 'art 13', 'art 13', 'art 8', 'art. 1', 'art 5', 'art. 1', 'art 3', 'art 4', 'art. 1', 'art. 1', 'art. 1', 'art. 1', 'art. 1', 'art. 1', 'art 4', 'art 13', 'art 5', 'art 5', 'art 1', 'art 5', 'art 5', 'art 5', 'art 5', 'art 5', 'art 5', 'art 2', 'art 13', 'art. 1', 'art. 1', 'art. 1']

Part 6U.K.Relationships treated as loan relationships etc
Chapter 2U.K.Relevant non-lending relationships
Introduction: meaning of “relevant non-lending relationship” etcU.K.
(b)a debt in relation to which exchange gains or losses arise to the company, F4...
(c)a debt in relation to which an impairment loss (or credit in respect of the reversal of an impairment loss) [F5or release debit ] arises to the company in respect of an unpaid (or previously unpaid) business payment[F6, and
(3)In subsection [F7(2)(c)] “business payment” means a payment which, if it were paid, would fall to be brought into account for corporation tax purposes as a receipt of a trade, UK property business or overseas property business carried on by the company.
[F8(3A) In subsection (2)(d) “relevant deduction” means a deduction allowed in calculating the profits of a trade, UK property business or overseas property business. ]
F4Word in s. 479(2)(b) omitted (22.4.2009 retrospective) by virtue of Finance Act 2009 (c. 10), s. 42(5)(a)(12)
F5Words in s. 479(2)(c) inserted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(5)(b)(12)
F6S. 479(2)(d) and word inserted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(5)(c)(12)
F7Word in s. 479(3) substituted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(6)(12)
F8S. 479(3A) inserted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(7)(12)
(d)in the case of a debt in relation to which an impairment loss [F9or release debit] arises to the company in respect of an unpaid business payment, the [F10 impairment or release,]
(e)in the case of a debt in relation to which a credit in respect of the reversal of an impairment loss arises to the company in respect of a previously unpaid business payment, the reversal [F11and
(4)In subsection [F12(3)(d) and (e)] “business payment” has the meaning given in section 479(3).
[F13(4A) In subsection (3)(f) “ relevant deduction ” has the meaning given in section 479(3A). ]
F9Words in s. 481(3)(d) inserted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(9)(a)(12)
F10Words in s. 481(3)(d) substituted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(9)(a)(12)
F11S. 481(3)(f) and word inserted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(9)(b)(12)
F12Words in s. 481(4) substituted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(10)(12)
F13S. 481(4A) inserted (22.4.2009 retrospective) by Finance Act 2009 (c. 10), s. 42(11)(12)
Meaning of “money debt” and “interest” in this ChapterU.K.
483Exchange gains and losses: amounts treated as money debtsU.K.
(1)This section applies for the purposes of this Chapter so far as relating to exchange gains and losses.
(2)Any currency held by a company is treated as a money debt owed to the company.
(3)A provision made by a company for the purposes of its statutory accounts in respect of a liability to which the company may become subject is treated as a money debt owed by the company if it meets conditions A and B.
(4)Condition A is that if the company became subject to the liability, the duty to settle it would be owed for the purposes of—
(b)a UK property business, or
(5)Condition B is that the provision falls to be taken into account (apart from Part 5) in calculating the profits or losses of the trade, UK property business or overseas property business for corporation tax purposes.
(6)In the case of a company carrying on insurance business—
(a)any deferred acquisition costs are treated as a money debt owed to the company, and
(b)any provision made by the company for unearned premiums or for unexpired risks is treated as a money debt owed by the company.
(a)“deferred acquisition costs” has the meaning given in Assets item G.II in the Balance Sheet Format set out after paragraph 10 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410), as read with note (17) of the Notes on the Balance Sheet Format (which immediately follow that Format),
(b)“provision made by the company for unearned premiums” has the meaning given in Liabilities item C.1 in that Balance Sheet Format, as read with notes (12) and (20) of those Notes, and
(c)“provision for unexpired risks” has the meaning given in paragraph 91 of that Schedule.
(8)This section is subject to section 486 (exclusion of exchange gains and losses in respect of tax debts etc).
(1)References in this Chapter to interest payable on a money debt include a reference to any amount which because of [F14Part 4 of TIOPA 2010] (provision not at arm's length) falls to be treated as—
F14Words in s. 484(1) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 139 (with Sch. 9 paras. 1-9, 22)
(2)If the relevant money debt is an amount of tax payable under the law of a territory outside the United Kingdom, exchange gains or losses arise for the purposes of this Chapter only so far as a deduction in respect of the tax falls to be made under [F15section 112 of TIOPA 2010] (double taxation relief: deduction for foreign tax where no credit allowable).
[F16(c)as ordinary BLAGAB management expenses within the meaning of section 77 of FA 2012 (insurance companies carrying on basic life assurance and general annuity business).]
F15Words in s. 486(2) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 91 (with Sch. 9 paras. 1-9, 22)
F16S. 486(4)(c) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 162
[F17Chapter 2AU.K.Disguised interest
F17Pt. 6 Ch. 2A inserted (with effect in accordance with Sch. 24 paras. 11, 13-16 of the amending Act) by Finance Act 2009 (c. 10), Sch. 24 para. 3
C2Pt. 6 Ch. 2A applied by 2010 c. 8, s. 371SP(2) (as inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 1)
486AOverviewU.K.
(1)This Chapter provides for Part 5 to apply in relation to returns which are economically equivalent to interest (see section 486B).
486BDisguised interest to be regarded as profit from loan relationshipU.K.
(1)Where a company is party to an arrangement which produces for the company a return in relation to any amount which is economically equivalent to interest, Part 5 applies as if the return were a profit arising to the company from a loan relationship.
(3) In subsection (2)(c) “ the relevant time ” means the time when the company becomes party to the arrangement or, if later, when the arrangement begins to produce a return for the company.
(9) In this Chapter “ arrangement ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), other than one which constitutes a finance lease (within the meaning given by section 219 of CAA 2001).
C3S. 486B(7) excluded (19.7.2011) by 1988 c. 1, Sch. 25 para. 12F(6) (as inserted (with effect in accordance with Sch. 12 para. 14(2) of the amending Act) by Finance Act 2011 (c. 11), Sch. 12 para. 3)
486CExclusion where return otherwise taxableU.K.
C4Ss. 486C-486E excluded (19.7.2011) by 1988 c. 1, Sch. 25 para. 12F(6) (as inserted (with effect in accordance with Sch. 12 para. 14(2) of the amending Act) by Finance Act 2011 (c. 11), Sch. 12 para. 3)
F18S. 486D(5)(6) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 20 para. 26 (with Sch. 20 para. 50(9))
486EExcluded sharesU.K.
(1) This Chapter does not apply in relation to an accounting period (“ the relevant accounting period ”) of a company (“the holding company”) for which an arrangement produces a return for the company if the arrangement involves only relevant shares held by the company throughout the relevant period.
(2) In this section “ the relevant period ” means the period—
(a) “ fair value ”, in relation to relevant shares held by the holding company, means an amount which the company would obtain from a knowledgeable and willing purchaser of the shares dealing at arm's length, and
(5) In this section “ relevant shares ” means shares which, throughout the relevant period, are—
(c)it is a [F19CFC within the meaning of Part 9A of TIOPA 2010].
[F20(9)For the purposes of subsection (7)(b) a company (“C”) is a relevant joint venture company if—
(a)the holding company is one of two persons who, taken together, control C,
(b)the holding company has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C, and
(a)section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purpose of determining if two persons, taken together, control a company, and
(b)section 371RD of that Act applies for the purpose of determining if the requirements of paragraphs (b) and (c) are met in any case.]
(12)Section 550(3) (repos: ignoring effect on borrower of sale of securities) does not apply for the purposes of this section.]
F19Words in s. 486E(7)(c) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 27(2) (with Sch. 20 para. 50(9))
F20S. 486E(9)(10) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 27(3) (with Sch. 20 para. 51)
F21S. 486E(11) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 20 para. 27(4) (with Sch. 20 para. 50(9))
[F22Chapter 2BU.K.Transferred income streams
F22Pt. 6 Ch. 2B inserted (with effect in accordance with Sch. 25 para. 10 of the amending Act) by Finance Act 2009 (c. 10), Sch. 25 para. 8(3)
486FIntroduction to ChapterU.K.
(a)[F23Chapter 1 of Part 16 of CTA 2010] (transfers of income streams by companies), or
(b)Chapter 5A of Part 13 of ITA 2007 (transfers of income streams by individuals).
F23Words in s. 486F(2)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 625 (with Sch. 2)
486GConsideration to be treated as loan relationshipU.K.
(a)the consideration for the transfer of the right to relevant receipts is to be treated as a money debt which is owed to the transferee by the person by whom the relevant receipts fall to be paid, and
(b)the transfer is to be treated as a transaction for the lending of money from which that debt is treated as arising.
(2)For the meaning of “relevant receipts” see [F24section 752(2) of CTA 2010] or section 809AZA(2) of ITA 2007.]
F24Words in s. 486G(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 626 (with Sch. 2)
Chapter 3U.K.OEICs, unit trusts and offshore funds
488Meaning of “open-ended investment company” etcU.K.
(1)[F25Sections 613 and 615(3) of CTA 2010] (meaning of “open-ended investment company” and “company” and application to parts of umbrella companies) apply for the purposes of this Chapter as they apply for the purposes of [F26Chapter 2 of Part 13 of that Act].
(2)In this Chapter “umbrella company” has the meaning given by [F27section 615 of CTA 2010].
F25Words in s. 488(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 627(2)(a) (with Sch. 2)
F26Words in s. 488(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 627(2)(b) (with Sch. 2)
F27Words in s. 488(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 627(3) (with Sch. 2)
[F28489Meaning of “offshore fund” etcU.K.
[F29Sections 355 to 363 of TIOPA 2010] (meaning of “offshore fund” and application to parts of umbrella funds and classes of interests in offshore funds) apply for the purposes of this Chapter as they apply for the purposes of [F30Part 8] of that Act.]
F28Words in s. 489 substituted (with effect in accordance with art. 1(2)(3) Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 131(2)
F29Words in s. 489 substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 172(a) (with Sch. 9 paras. 1-9, 22)
F30Words in s. 489 substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 172(b) (with Sch. 9 paras. 1-9, 22)
Holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rightsU.K.
490Holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rightsU.K.
(a)at any time in an accounting period of a company it holds—
(iii)[F31an interest] in an offshore fund, and
(b)there is a time in the period when that company, scheme or fund fails to meet the qualifying investments test (see section 493).
(2)The Corporation Tax Acts have effect for the accounting period in accordance with subsections (3) and (4) as if the relevant holding were rights under a creditor relationship of the company.
(3)The credits and debits to be brought into account for the purposes of Part 5 in respect of the company's relevant holdings are to be determined on the basis of fair value accounting.
(4)But a credit relating to distributions of an open-ended investment company or authorised unit trust which become due and payable in an accounting period is only to be brought into account for that period if they are interest distributions.
(5)In subsection (4) “interest distributions” has the meaning given by regulations made under section 17(3) of F(No.2)A 2005.
(6)In this section and sections 491 and 492 “relevant holding” means a holding within subsection (1)(a).
(7)[F32But the following are not treated as such a holding—
(a)arrangements] that are investment bond arrangements for the purposes of Chapter 6 of this Part or are within section 48A of FA 2005 (alternative finance arrangements: alternative finance investment bond: introduction) [F33, and
(b)a holding in an offshore fund (including a unit trust which is also an offshore fund) if the income arising to the fund is treated as the income of the company]
(8)See section 18(2)(c)(i) of F(No.2)A 2005 (section 17(3): specific powers) for the power to modify “relevant holding” for the purposes of this section and section 492 by regulations under section 17(3) of that Act (regulations about authorised unit trusts and OEICS).
F31Words in s. 490(1)(a)(iii) substituted (with effect in accordance with art. 1(2)(3) Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 131(3)
F32Words in s. 490(7) substituted (27.5.2011) (with effect in accordance with reg. 1(2) of the amending S.I.) by The Offshore Funds (Tax) (Amendment) Regulations 2011 (S.I. 2011/1211), regs. 1(1), 45(a)
F33Words in s. 490(7) substituted (27.5.2011) (with effect in accordance with reg. 1(2) of the amending S.I.) by The Offshore Funds (Tax) (Amendment) Regulations 2011 (S.I. 2011/1211), regs. 1(1), 45(b)
C5S. 490 applied (with modifications) by S.I. 2006/694, reg. 69Z64 (as inserted (1.9.2009) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2009 (S.I. 2009/2036), regs. 1, 24)
491Holding coming within section 490: opening valuationsU.K.
(a)a relevant holding is held by a company both—
(i)at the end of one accounting period (“the first period”), and
(ii)at the beginning of the next (“the second period”), and
(b)section 490 applies to the holding for the second period but not the first period.
(2)For the purposes of section 490(3), the opening value of the holding as at the beginning of the second period is taken to be equal to its market value for the purposes of TCGA 1992 immediately before the end of the first period (see section 272 of that Act).
(b)in a case where under [F34section 615(3) of CTA 2010] part of an umbrella company is regarded as an open-ended investment company, to such of the property subject to the collective investment scheme constituted by the umbrella company as forms part of the separate pool in question,
(6)A person with rights in a part of an umbrella company which is regarded under [F35section 615(3) of CTA 2010] as an open-ended investment company is treated for the purposes of this section as not owning shares in the umbrella company.
(7)For the meaning of references to investments subject to the trusts of the scheme in the case of certain authorised unit trusts, see [F36section 619 of CTA 2010] (umbrella schemes).
F34Words in s. 493(2)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 628(2) (with Sch. 2)
F35Words in s. 493(6) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 628(3) (with Sch. 2)
F36Words in s. 493(7) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 628(4) (with Sch. 2)
(ii)in a case where under [F37section 615(3) of CTA 2010] part of an umbrella company is regarded as an open-ended investment company, rights in the separate pool in question,
F37Words in s. 495(3)(a)(ii) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 629 (with Sch. 2)
Chapter 4U.K.Building Societies
C6S. 498 definition excluded (1.3.2013) by The Building Societies (Core Capital Deferred Shares) Regulations 2013 (S.I. 2013/460), regs. 1(1), 3(1)(e) (with reg. 1(2))
Chapter 5U.K.Industrial and provident societies
Chapter 6U.K.Alternative finance arrangements
501Introduction to ChapterU.K.
(1)This Chapter provides for alternative finance arrangements between companies and financial institutions to be treated as loan relationships (see sections 509 and 510).
(a)“purchase and resale arrangements” means arrangements to which section 503 applies,
(b)“diminishing shared ownership arrangements” means arrangements to which section 504 applies,
(c)“deposit arrangements” means arrangements to which section 505 applies,
(d)“profit share agency arrangements” means arrangements to which section 506 applies, and
(e)“investment bond arrangements” means arrangements to which section 507 applies.
(4)For the meaning of “financial institution”, see section 502.
502Meaning of “financial institution”U.K.
(1)In this Chapter “financial institution” means—
(a)a bank, as defined by [F38section 1120 of CTA 2010],
(b)a building society within the meaning of the Building Societies Act 1986 (c. 53),
(c)a wholly-owned subsidiary of a bank within paragraph (a) or a building society within paragraph (b),
[F39(d)a person authorised by a licence under Part 3 of the Consumer Credit Act 1974 (c. 39) to carry on a consumer credit business or consumer hire business within the meaning of that Act,]
[F39(d)a person with permission under Part 4A of the Financial Services and Markets Act 2000 to enter into, or to exercise or have the right to exercise rights and duties under, a contract of the kind mentioned in paragraph 23 or paragraph 23B of Schedule 2 to that Act (credit agreements and contracts for hire of goods);]
(e)a bond-issuer, within the meaning of section 507, but only in relation to any bond assets which are rights under purchase and resale arrangements[F40, diminishing shared ownership arrangements or profit share agency arrangements], F41...
[F42(g)an insurance company, as defined by [F43section 65 of FA 2012], or
(h)a person who is authorised in a jurisdiction outside the United Kingdom to carry on a business which consists of effecting or carrying out contracts of insurance or substantially similar business but not an insurance special purpose vehicle as defined in [F44section 139(1) of FA 2012].]
[F45(1A)Subsection (1)(d) must be read with—
(b)the parent's wholly-owned subsidiaries or persons acting on behalf of the parent's wholly-owned subsidiaries.
F38Words in s. 502(1)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 630 (with Sch. 2)
F39S. 502(1)(d) substituted (26.7.2013 for specified purposes, 1.4.2014 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (S.I. 2013/1881), art. 1(2)(6), Sch. para. 16(a)
F40Words in s. 502(1)(e) substituted (with effect in accordance with art. 1(3) of the amending S.I.) by Alternative Finance Arrangements (Amendment) Order 2009 (S.I. 2009/2568), arts. 1(2), 3(2)(a)
F41Word in s. 502(1)(e) omitted (with effect in accordance with art. 1(3) of the amending S.I.) by virtue of Alternative Finance Arrangements (Amendment) Order 2009 (S.I. 2009/2568), arts. 1(2), 3(2)(b)
F42S. 502(1)(g)(h) inserted (with effect in accordance with art. 1(3) of the amending S.I.) by Alternative Finance Arrangements (Amendment) Order 2009 (S.I. 2009/2568), arts. 1(2), 3(2)(c)
F43Words in s. 502(1)(g) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 163(a)
F44Words in s. 502(1)(h) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 163(b)
F45S. 502(1A) inserted (26.7.2013 for specified purposes, 1.4.2014 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (S.I. 2013/1881), art. 1(2)(6), Sch. para. 16(b)
Arrangements that are alternative finance arrangementsU.K.
503Purchase and resale arrangementsU.K.
(4)This section is subject to section 508 (provision not at arm's length: exclusion of arrangements from this section and sections 504 to 507).
504Diminishing shared ownership arrangementsU.K.
(e)the eventual owner is to make other payments to the first owner (whether under a lease forming part of the arrangements, or otherwise),
(6)This section is subject to section 508 (provision not at arm's length: exclusion of arrangements from section 503, this section and sections 505 to 507).
505Deposit arrangementsU.K.
(2)This section is subject to section 508 (provision not at arm's length: exclusion of arrangements from sections 503 and 504, this section, and sections 506 and 507).
[F46(a)a person (“the principal”) appoints an agent,
F46S. 506(1)(a)(ab) substituted for s. 506(1)(a) (with effect in accordance with art. 1(3) of the amending S.I.) by Alternative Finance Arrangements (Amendment) Order 2009 (S.I. 2009/2568), arts. 1(2), 3(3)
507Investment bond arrangementsU.K.
(3)This section is subject to section 508.
(b)[F47subsection (3) or (5) of section 147 of TIOPA 2010] (provision not at arm's length) requires the profits and losses of a person who is a party to the arrangements to be calculated for tax purposes as if the arm's length provision referred to [F48in that subsection] had been made or imposed, rather than in accordance with the arrangements,
(c)any person who is an affected person for the purposes of [F49Part 4 of TIOPA 2010] (“the affected person”) is entitled to—
F47Words in s. 508(2)(b) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 140(a) (with Sch. 9 paras. 1-9, 22)
F48Words in s. 508(2)(b) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 140(b) (with Sch. 9 paras. 1-9, 22)
F49Words in s. 508(2)(c) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 140(c) (with Sch. 9 paras. 1-9, 22)
Treatment for other tax purposesU.K.
514Exclusion of alternative finance return from consideration for sale of assetsU.K.
(1)If under purchase and resale arrangements an asset is sold by one party to the arrangements to the other party, the alternative finance return is excluded in determining the consideration for the sale and purchase of the asset for the purposes of the Corporation Tax Acts (apart from section 503).
(2)If under diminishing shared ownership arrangements an asset is sold by one party to the arrangements to the other party, the alternative finance return is excluded in determining the consideration for the sale and purchase of the asset for the purposes of the Corporation Tax Acts (apart from section 504).
(3)If under investment bond arrangements an asset is sold by one party to the arrangements to the other party, the alternative finance return is excluded in determining the consideration for the sale and purchase of the asset for the purposes of the Corporation Tax Acts (apart from section 507).
(4)Subsections (1) to (3) do not affect the operation of any provision of the [F50Tax Acts or TCGA 1992] which provides that the consideration for a sale or purchase is taken for any purpose to be an amount other than the actual consideration.
F50Words in s. 514(4) substituted (1.4.2009 retrospective) by Corporation Tax Act 2009 (Amendment) Order 2009 (S.I. 2009/2860), arts. 1(2), 6(3)
516Treatment of principal under profit sharing agency arrangementsU.K.
(1)The principal under profit sharing agency arrangements is not treated for the purposes of the Corporation Tax Acts as entitled to profits to which the agent is entitled in accordance with section 506(1)(d).
(2)And the agent under such arrangements is treated for those purposes as entitled to those profits and the profits specified in section 506(1)(c).
(3)In this section “the principal” and “the agent” are to be read in accordance with section 506.
518Investment bond arrangements: treatment as securitiesU.K.
(1)Investment bond arrangements are securities for the purposes of the Corporation Tax Acts.
(a)a reference in an enactment to redemption is to be taken as a reference to making the redemption payment, F51...
(b)a reference in an enactment to interest is to be taken as a reference to alternative finance return[F52, and
(c)the bond-issuer is to be treated for the purposes of [F53Chapter 4 of Part 13 of CTA 2010 (securitisation companies)] as being party as debtor to a capital market arrangement.]
(3)In subsection (2) “the redemption payment” has the same meaning as in section 507 (see subsection (1)(d)(ii) of that section).
F51Word in s. 518(2)(a) omitted (1.4.2009 retrospective) by virtue of Corporation Tax Act 2009 (Amendment) Order 2009 (S.I. 2009/2860), arts. 1(2), 6(4)(a)
F52S. 518(2)(c) and word inserted (1.4.2009 retrospective) by Corporation Tax Act 2009 (Amendment) Order 2009 (S.I. 2009/2860), arts. 1(2), 6(4)(b)
F53Words in s. 518(2)(c) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 631 (with Sch. 2)
(2)For the purposes of [F54sections 453 and 454 of CTA 2010 (definitions related to close companies)]—
(b)investment bond arrangements must be ignored in the application of [F55section 454(2)(e) of CTA 2010].
(3)For the purposes of [F56Chapter 6 of Part 5 of CTA 2010] (group relief)—
(b)[F57condition C in section 162(4) of CTA 2010] must be ignored in determining whether a person is an equity holder as a result of investment bond arrangements.
[F58(4)Investment bond arrangements are not—
F54Words in s. 519(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 632(2)(a) (with Sch. 2)
F55Words in s. 519(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 632(2)(b) (with Sch. 2)
F56Words in s. 519(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 632(3)(a) (with Sch. 2)
F57Words in s. 519(3)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 632(3)(b) (with Sch. 2)
F58S. 519(4) inserted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 632(4) (with Sch. 2)
C7S. 519(4)(b) modified (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 9 para. 38 (with Sch. 9 paras. 1-9, 22)
(b)any deduction [F59from] total profits,
F59Word in s. 520(2)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 633 (with Sch. 2)
Power to extend this Chapter to other arrangementsU.K.
F60521Power to extend this Chapter to other arrangementsU.K.
F60S. 521 repealed (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 225, Sch. 10 Pt. 7 (with Sch. 9 paras. 1-9, 22)
[F61Chapter 6AU.K.Shares accounted for as liabilities
F61Pt. 6 Ch. 6A inserted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 of the commencing Act) by Finance Act 2009 (c. 10), Sch. 24 para. 412
521AIntroduction to ChapterU.K.
(6) See section 116B of TCGA 1992 for the effect for chargeable gains purposes of shares beginning or ceasing to be shares to which section 521C applies.
521BApplication of Part 5 to certain shares as rights under creditor relationshipU.K.
(1)This section applies in relation to the times in a company's accounting period when—
(5) Subsection (2)(b) does not affect the operation of Part 1 of Schedule 25 of ICTA (controlled foreign companies: acceptable distribution policy) (including as it continues to have effect in accordance with paragraph 8(1) of Schedule 16 to FA 2009).
521CShares accounted for as liabilitiesU.K.
(1)This section applies to the share if—
(3) In subsection (2)(c) “ the relevant time ” means the time when the investing company first holds the share or, if later, when the share begins to produce a return for the investing company.
C8S. 521C applied by 2010 c. 8, s. 371SQ(2) (as inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 1)
521DExcepted sharesU.K.
(5) For the purposes of subsections (3) and (4) companies are associated companies if they are members of the same group of companies for the purposes of [F62Part 5 of CTA 2010 (group relief) (see section 152 of that Act)].
F62Words in s. 521D(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 634 (with Sch. 2)
F63S. 521E(5)(6) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 20 para. 28 (with Sch. 20 para. 50(9))
521F Shares becoming or ceasing to be shares to which section 521B appliesU.K.
C9S. 521F excluded (with effect in accordance with Sch. 24 paras. 13-16 of the commencing Act) by Finance Act 2009 (c. 10), Sch. 24 para. 15(4)
F64522Introduction to ChapterU.K.
F64Pt. 6 Ch. 7 omitted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 8(c)(i), 12
F64523Application of Part 5 to certain shares as rights under creditor relationshipU.K.
F64524Shares subject to outstanding third party obligationsU.K.
F64525Meaning of “interest-like investment”U.K.
F64526Non-qualifying sharesU.K.
F64527The increasing value conditionU.K.
F64528Regulations about income-producing assetsU.K.
F64529The redemption return conditionU.K.
F64530The redemption return condition: excepted sharesU.K.
F64531The redemption return condition: unallowable purposesU.K.
F64532The associated transactions conditionU.K.
F64533Power to change conditions for non-qualifying sharesU.K.
F64534Amounts to be brought into account where section 523 appliesU.K.
F64535Shares ceasing to be shares to which section 523 appliesU.K.
Chapter 8U.K.
F65536Introduction to ChapterU.K.
F65Pt. 6 Ch. 8 omitted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 of the commencing Act) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 8(c)(ii), 12
F65537Payments in return for capital contribution to partnershipU.K.
F65538Change of partnership sharesU.K.
Chapter 9U.K.Manufactured interest etc
F66(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F66S. 539(7) omitted (1.1.2014) by virtue of Finance Act 2013 (c. 29), Sch. 29 paras. 35, 52
540Manufactured interest treated as interest under loan relationshipU.K.
(1)If a company has a manufactured interest relationship under which manufactured interest is payable by it, Part 5 applies to the company and the manufactured interest as it would if the manufactured interest were interest payable on a loan to the company (and so were interest under a loan relationship to which the company is a party).
(2)If a company has a manufactured interest relationship under which manufactured interest is payable to it, Part 5 applies to the company and the manufactured interest as it would if—
(a)the manufactured interest were interest payable on a loan by the company (and so were interest under a loan relationship to which the company is a party), and
(b)the manufactured interest relationship were the loan relationship under which the real interest is payable.
(3)Accordingly, subject to subsection (2)(b), references in the Corporation Tax Acts to a loan relationship include a reference to a manufactured interest relationship [F67and the credits and debits to be brought into account in respect of manufactured interest for any period are those that are recognised in determining the company's profit or loss for the period in accordance with generally accepted accounting practice (but subject to the provisions of Part 5, including, in particular, section 307(3) F68...].
(4)Subsection (5) applies if a company—
(a)has a manufactured interest relationship, but
(b)enters into a related transaction in respect of the right to receive manufactured interest as a result of which the manufactured interest is not payable to the company.
(5)Even though the manufactured interest is not payable to the company, for the purpose of bringing credits into account in respect of that or any other related transaction because of the application of subsection (2), the company is still treated as having a manufactured interest relationship.
(6)This section is subject to Chapter 10 (repos).
F67Words in s. 540(3) inserted (with effect in accordance with Sch. 30 para. 5(3) of the amending Act) by Finance Act 2009 (c. 10), Sch. 30 para. 5(1)
F68Words in s. 540(3) omitted (1.1.2014) by virtue of Finance Act 2013 (c. 29), Sch. 29 paras. 36, 52
541Debits for deemed interest under stock lending arrangements disallowedU.K.
(1)This section applies if a company is the borrower under a stock lending arrangement for the purposes of [F69section 812 of CTA 2010] (which treats such a borrower as having made a payment representative of interest for the purposes of this Chapter).
(2)In accordance with [F70subsection (3) of that section] (which prevents deductions or group relief for the borrower in stock lending cases), the company may not bring debits into account for the purposes of Part 5 [F71of this Act] in respect of the representative payment which is treated as having been made under [F72subsection (2) of that section].
F69Words in s. 541(1) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 637(2) (with Sch. 2)
F70Words in s. 541(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 637(3)(a) (with Sch. 2)
F71Words in s. 541(2) inserted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 637(3)(b) (with Sch. 2)
F72Words in s. 541(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 637(3)(c) (with Sch. 2)
Chapter 10U.K.Repos
(2)Sections 543 to [F73546] make provision about arrangements which are creditor repos or creditor quasi-repos.
F73Figure in s. 542(2) substituted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 of the commencing Act) by Finance Act 2009 (c. 10), Sch. 24 paras. 10, 12
Creditor repos and creditor quasi-reposU.K.
544Meaning of creditor quasi-repoU.K.
(1)For the purposes of this Chapter a company (“the lender”) has a creditor quasi-repo in any case if—
545Ignoring effect on lender etc of sale of securitiesU.K.
(1)This section applies if a company (“the lender”) has a creditor repo or a creditor quasi-repo.
F74547Repo under arrangement designed to produce quasi-interest: tax avoidanceU.K.
F74S. 547 omitted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 of the commencing Act) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 8(c)(iii), 12
C10S. 548 applied by 2010 c. 4, s. 938I(3) (as inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 5 para. 2)
(4)Condition C is that under that or any other arrangement the borrower [F75or any other person] sells any securities at any time.
F75Words in s. 549(4) inserted (1.4.2009 retrospective) by Corporation Tax Act 2009 (Amendment) Order 2009 (S.I. 2009/2860), arts. 1(2), 6(5)
C11S. 549 applied by 2010 c. 4, s. 938I(3) (as inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 5 para. 2)
(4)Subsection (3) is subject to subsections (5) to [F76(5C)] .
[F77(5A)For the purposes of the charge to corporation tax, an amount representative of income payable in respect of the securities is not to be ignored as a result of subsection (3)(b) if—
[F78(5B)Nothing in subsection (3) entitles the borrower to double taxation relief in respect of any income payable in respect of overseas securities.
F79(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)For the purposes of this section “double taxation relief” means any relief given under or as a result of [F80Part 2 of TIOPA 2010].
F76Word in s. 550(4) substituted (1.1.2014) by Finance Act 2013 (c. 29), Sch. 29 paras. 37(a), 52
F77S. 550(5A) inserted (retrospectively) by Finance Act 2010 (c. 13), s. 45(2)(b)(3)
F78S. 550(5B)-(5D) inserted (1.1.2014) by Finance Act 2013 (c. 29), Sch. 29 paras. 37(b), 52
F79S. 550(6) omitted (1.1.2014) by virtue of Finance Act 2013 (c. 29), Sch. 29 para. 37(c), 52
F80Words in s. 550(7) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 92 (with Sch. 9 paras. 1-9, 22)
553Persons buying or selling for othersU.K.
(1)For the purposes of this Chapter, in any case where—
D (not C) is treated as selling the securities.
554Power to modify this ChapterU.K.
(1)The Treasury may by regulations provide for all or any of the provisions of this Chapter to apply with modifications in relation to—
(a)cases where section 555 (non-standard repo cases) applies, or
(4)In this section and section 555—
“modifications” include exceptions and omissions, and
“repo” means—
a debtor repo or debtor quasi-repo, or
a creditor repo or creditor quasi-repo (including anything treated, as a result of section 547, as a creditor repo for the purposes of section 546).
555Cases where section 554 applies: non-standard reposU.K.
(1)The cases to which this section applies are where—
(c)any of conditions A to C is met in relation to the repo.
C12S. 556 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 18(11)
C13S. 556 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 20(11)
C14S. 556 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 25(4)
C15S. 556 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 31(3)
C16S. 556 applied (19.7.2011) by Finance Act 2011 (c. 11), Sch. 19 para. 22(3)
(a)an insurance company (as defined in [F81section 65 of FA 2012]) which carries on long-term business (as defined in [F81section 63 of that Act]), or
(b)a friendly society which would be such an insurance company [F82if subsection (3)(a) were omitted from section 65 of that Act.]
F81Words in s. 560(4)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 164(a)
F82Words in s. 560(4)(b) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 164(b)
“capital redemption policy” means a contract made in the course of capital redemption business (as defined in [F83section 56(3) of FA 2012]),
F83Words in s. 561(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 165
(a)if a single rate of tax under [F84section 102(3) of FA 2012] (lower corporation tax rate on certain insurance company profits) is applicable in relation to the accounting period, that rate, and
F84Words in s. 563(6)(a) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 166
(1)In section 563 “BLAGAB contract” means a contract forming part of basic life assurance and general annuity business of an insurance company but not part of business which is exempt from corporation tax under [F85section 158 of FA 2012] (friendly society business and former friendly society business).
F85Words in s. 564(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 18 para. 21
“the deemed surrender” means the surrender of all the rights under that contract that the relevant company was deemed for the purposes of Chapter 2 of Part 13 of ICTA (life policies etc) to have made F86... under paragraph 6(1) of Schedule 13 to FA 2008 F87...,
“the first accounting period” means the first accounting period of the company beginning on or after [F881 April 2008], and
F86Words in s. 566(2) omitted (retrospective and with effect in accordance with art. 1(2) of the commencing S.I.) by virtue of Corporation Tax Act 2009 (Amendment) Order 2010 (S.I. 2010/614), arts. 1(1), 3(4)(a)(i)
F87Words in s. 566(2) omitted (retrospective and with effect in accordance with art. 1(2) of the commencing S.I.) by virtue of Corporation Tax Act 2009 (Amendment) Order 2010 (S.I. 2010/614), arts. 1(1), 3(4)(a)(ii)
F88Words in s. 566(2) substituted (retrospective and with effect in accordance with art. 1(2) of the commencing S.I.) by Corporation Tax Act 2009 (Amendment) Order 2010 (S.I. 2010/614), arts. 1(1), 3(4)(b)