Finance Act 1988

1 (1) Subject to sub-paragraph (3) below, where—

(a) there is a disposal by a company of a linked company debt on a security owed by another company, and

(b) the two companies are linked companies immediately before the disposal,

there shall be no indexation allowance on the disposal.

(2) Subject to sub-paragraph (3) below, where—

(a) there is a disposal by a company of a debt on a security owed by another company which is not a linked company debt on a security, and

(b) the two companies are linked companies immediately before the disposal,

then, in ascertaining any indexation allowance due on the disposal, RD as defined in section 87(2) of the [1982 c. 39.] Finance Act 1982 shall be taken as the retail prices index for the first month after the acquisition of the debt in which the two companies were linked companies (or, if later, March 1982).

(3) Where—

(a) there is a disposal by a company of a debt on a security owed by another company,

(b) the debt constituted or formed part of the new holding received by the company making the disposal on a reorganisation, and

(c) sub-paragraph (1) or (2) above would apply in relation to the disposal but for this sub-paragraph,

neither of those sub-paragraphs shall apply in relation to the disposal, but any indexation allowance which, apart from this sub-paragraph, would be due on the disposal shall be reduced by such amount as appears to the inspector, or on appeal the Commissioners concerned, to be just and reasonable.

(4) For the purposes of this paragraph a debt on a security owed by a company is a linked company debt on a security where immediately after its acquisition by the company making the disposal the two companies were linked companies.