In this section and sections F6409 to 412 “deeply discounted security” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see section 430 of that Act).

The provisions of Chapter 8 of Part 4 of ITTOIA 2005 apply for the purposes of this section and sections F9409 to 412 for determining the difference between the issue price of a security and the amount payable on redemption as they apply for the purposes of section 430 of that Act.

If there is a person within subsection (1)(b) for only part of the relevant period, subsection (2) applies only to the appropriate proportion of the relevant debits.

In subsection (3) “the appropriate proportion” means the proportion that the part of the relevant period for which there is such a person bears to the whole of that period.

The amount of the discount that is referable to the relevant period is the amount of it which would be brought into account for the purposes of this Part for the relevant period in the case of the issuing company, apart from subsections (2) and (3).

In this section—

• “CIS-based close company” means a company that would not be a close company apart from the rights and powers of one or more partners in a CIS limited partnership being attributed to another of the partners under F12section 451(4) to (6) of CTA 2010 because of section 448(1)(a) of that Act,

• “CIS limited partnership” means a limited partnership—

  1. a

     which is a collective investment scheme, or

  2. b

     which would be a collective investment scheme if it were not a body corporate,

• “issuing company” has the same meaning as in section 409 (see subsection (1)(a) of that section),

• “non-qualifying territory” has the meaning given by F18section 173 of TIOPA 2010 (provision not at arm's length),

• F5 “resident for tax purposes” means liable, under the law of the non-qualifying territory, to tax there by reason of domicile, residence or place of management, and

• “small or medium-sized enterprise” has the meaning given by F11section 172 of TIOPA 2010.

For the purposes of this section, a non-qualifying territory is “non-taxing” if companies are not under its law liable to tax by reason of domicile, residence or place of management.

For the meaning of “corresponding creditor relationship”, see section 412 (persons indirectly standing in the position of creditor).

Section 472 (meaning of “control”) applies for the purposes of section 409 and this section.

A person who is a participator in a company which controls another company is treated for the purposes of section 409 as being a participator in that other company also.

Subject to that, in section 409 and this section “participator”, in relation to a company, means a person who is a participator in the company F4within the meaning given by section 454 of CTA 2010, but not a person who is F8such a participator just because of being a loan creditor of the company.

In determining whether a person who carries on the trade of banking is a participator in a company for the purposes of section 409 and this section, securities of the company acquired by the person in the ordinary course of the person's business are ignored.

For the purposes of sections 407(1)(b) and 409 a person is treated as standing in the position of a creditor if the person indirectly stands in that position by reference to a series of loan relationships or relevant money debts.

If a company (“C”) is so treated for the purposes of section 407(1)(b), the reference in section 407(1)(e) to the corresponding creditor relationship is a reference to C's creditor relationship.

If a person (“P”) is so treated for the purposes of section 409, the reference in section 410(2)(b) to the corresponding creditor relationship is a reference to P's creditor relationship.

In subsection (1) “relevant money debt” means a money debt which would be a loan relationship if a company directly stood in the position of creditor or debtor.