M1(1)If the first buyer carries on a trade not falling within section 732, then in ascertaining whether any or what repayment of income tax is to be made to him under section 380 or 381 by reference to any loss sustained in the trade and the amount of his income for the year of assessment his income for which includes the interest, there shall be left out of account—
(a)the appropriate amount in respect of the interest, as determined in accordance with section 735, and
(b)any tax paid on that amount.
(2)Where the first buyer is a company which does not carry on a trade falling within section 732—
(a)the appropriate amount in respect of the interest, as determined in accordance with section 735(2), and
(b)any tax paid in respect of or deducted from that amount,
shall be disregarded except that, for the purposes of corporation tax on chargeable gains, the appropriate proportion of the net interest receivable by the first buyer as mentioned in section 735(2) shall be treated as if it were a capital distribution within the meaning of section [F1122(5)(b) of the 1992 Act] received in respect of the holding of the securities concerned.
(3)In applying references in this section to interest in relation to a qualifying distribution, references to any tax paid on or in respect of an amount shall be construed as references to so much of any related tax credit as is attributable to that amount; and for this purpose “”, in relation to an amount, means the tax credit to which the recipient of the distribution of which that amount is a proportion is entitled.
Textual Amendments
F1Words in s. 734(2) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(41) (with ss. 60, 101(1), 171, 201(3))
Marginal Citations
M1Source—1970 s.474; 1973 Sch.11 7; 1979(C) Sch.7; 1978 s.30(7)