Section 809BZD Deemed interest if borrower is not a partnershipF1

(1)

This section applies if—

(a)

there is a type 1 finance arrangement,

(b)

the borrower is not a partnership,

(c)

the arrangement is prevented by section 809BZB from having the relevant effect in relation to the borrower, or section 809BZC applies to the borrower, and

(d)

in accordance with generally accepted accounting practice the borrower's accounts record an amount as a finance charge in respect of the advance.

(2)

For income tax purposes the borrower may treat the amount as interest payable on a loan.

(3)

If an amount is treated as interest (“deemed interest”) under subsection (2), to find out when it is paid—

(a)

treat the payments mentioned in section 809BZA(2)(c) as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance,

(b)

treat the interest elements of the payments as paid when the payments are paid, and

(c)

treat the deemed interest as paid at the times when the interest elements are treated as paid.

Annotations

Textual amendments

F1: Pt. 13 Ch. 5B inserted (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. 5 para. 2 (with Sch. 9 paras. 1-9, 22)

Notes on Chapter 5B

Modifications

C1: Pt. 13 Ch. 5B restricted by 2004 s. 12 s. 196I(5)(6) (as inserted 17.7.2012 (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4))
C2: Pt. 13 Ch. 5B restricted by 2004 c. 12, s. 196G(2)(3) (as inserted 17.7.2012 (with effect in accordance with Sch. 13 para. 3 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 1 (with Sch. 13 Pt. 2))