Section 198 Balancing payments by guarantor to borrower: no charge to, or relief from, taxF7

(1)

If each of the qualifying conditions (see section 197) is met, subsection (2) applies to the balancing payments made by all of the F1guarantors if, or so far as, the total amount of those payments does not exceed the total amount of the reductions within section 197(4) F2that are result of the application of section 153A.

(2)

Payments to which this subsection applies—

(a)

are not to be taken into account in calculating for F3tax purposes the profits or losses of the guarantor company or companies or the F4borrower, and

(b)

are not for any purpose of the F5... Tax Acts to be regarded as distributions.

(3)

In this section, the following expressions have the meaning given by section 197—

“the balancing payments”,
“the guarantor company”, and
F6...

Annotations

Textual amendments

F1: Word in s. 198(1) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(b)(i), 12
F2: Words in s. 198(1) inserted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(b)(ii), 12
F3: Words in s. 198(2)(a) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(c)(i), 12
F4: Word in s. 198(2)(a) substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(c)(ii), 12
F5: Word in s. 198(2)(b) omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(d), 12
F6: Words in s. 198(3) omitted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(e), 12
F7: Word in s. 198 heading substituted (with effect in accordance with Sch. 6 para. 12 of the amending Act) by Finance Act 2026 (c. 11), Sch. 6 paras. 11(4)(a), 12

Notes on Part 4

Modifications

C1: Pt. 4 excluded by 2010 c. 4, s. 938N (as inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 5 para. 2)
C2: Pt. 4 excluded (1.10.2011) by Postal Services Act 2011 (c. 5), s. 93(2)(3), Sch. 2 para. 6(2); S.I. 2011/2329, art. 3
C3: Pt. 4 excluded (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 3(2); S.I. 2011/2576, art. 5
C4: Pt. 4 excluded (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 129(11) (with s. 147, Sch. 17)

Notes on Chapter 6

Modifications

C1: Pt. 4 Chs. 1 and 3-6 applied (1.4.2022 in relation to accounting periods beginning on or after that date) by Finance Act 2022 (c. 3), s. 51(1), Sch. 9 paras. 3, 4