SCHEDULES
C1C2C3C4C5C6C7C8C9C10C11C12C13SCHEDULE 28AA Provision not at arm’s length
Sch. 28AA applied (with modifications) (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 59(1)(2) (as amended by 2004 c. 12, s. 37, Sch. 5 para. 13) (with Sch. 22 para. 59(4))
Sch. 28AA applied by Finance Act 1996 (c. 8), s. 100 (as substituted (with effect in accordance with s. 79(3) of the 2002 amending Act) by Finance Act 2002 (c. 23), Sch. 23 para. 6 (with s. 81(4)(5), Sch. 23 para. 25))
Sch. 28AA modified by Finance Act 1996 (c. 8), Sch. 9 para. 11A(1) (as inserted (with effect in accordance with s. 79(3) of the 2002 amending Act) by Finance Act 2002 (c. 23), Sch. 23 para. 11 (with s. 81(4)(5), Sch. 23 para. 25))
Sch. 28AA excluded by Finance Act 1996 (c. 8), Sch. 9 para. 12(2ZA) (as inserted (with effect in accordance with s. 37 of the amending Act) by Finance Act 2004 (c. 12), Sch. 5 para. 7(2))
Sch. 28AA modified by Finance Act 1996 (c. 8), Sch. 9 para. 16 (as inserted (with effect in accordance with s. 37 of the amending Act) by Finance Act 2004 (c. 12), Sch. 5 para. 8)
Sch. 28AA excluded by Finance Act 2002 (c. 23), Sch. 26 para. 28(3A) (as inserted (with effect in accordance with s. 37 of the amending Act) by Finance Act 2004 (c. 12), Sch. 5 para. 15(2))
Sch. 28AA modified by Finance Act 2002 (c. 23), Sch. 26 para. 31A (as inserted (with effect in accordance with s. 37 of the amending Act) by Finance Act 2004 (c. 12), Sch. 5 para. 15(3))
Sch. 28AA excluded by Finance Act 2002 (c. 23), Sch. 29 para. 55(1A) (as inserted (with effect in accordance with s. 37 of the amending Act) by Finance Act 2004 (c. 12), Sch. 5 para. 16(2))
Sch. 28AA excluded (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), ss. 340(7), 625(7), 694(8)-(10), 775(3) (with ss. 628, 629, 636, Sch. 2 Pts. 1, 2)
Sch. 28AA applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), ss. 445-447 (with Sch. 2 Pts. 1, 2)
Sch. 28AA excluded (1.12.2009 with effect in accordance with reg. 1(2) of the affecting S.I.) by The Mutual Societies (Transfers of Business) (Tax) Regulations 2009 (S.I. 2009/2971), regs. 1(1), 19(6), 22(6) (with regs. 19(7)(10)(11), 22(7)(9)(10))
Sch. 28AA excluded (1.1.2010) by The Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 4(3), 6(2)
Provision in relation to securities: determination of arm’s length provision
1A
1
This paragraph applies where—
a
both of the affected persons are companies, and
b
the actual provision is provision in relation to a security issued by one of those companies (“the issuing company”).
2
Paragraph 1(2)(a) above shall be construed as requiring account to be taken of all factors, including—
a
the question whether the loan would have been made at all in the absence of the special relationship (see sub-paragraph (6) below),
b
the amount which the loan would have been in the absence of the special relationship, and
c
the rate of interest and other terms which would have been agreed in the absence of the special relationship,
but this is subject to the following provisions of this paragraph.
3
In a case where—
a
a company makes a loan to another company with which it has a special relationship, and
b
it is not part of the first company’s business to make loans generally,
the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing sub-paragraph (2) above.
4
Paragraph 1(2)(a) above shall be construed as requiring no account to be taken, in the determination of any of the matters mentioned in sub-paragraph (5) below, of (or of any inference capable of being drawn from) any guarantee provided by a company with which the issuing company has a participatory relationship (see sub-paragraphs (7) and (8) below).
5
The matters are—
a
the appropriate level or extent of the issuing company’s overall indebtedness;
b
whether it might be expected that the issuing company and a particular person would have become parties to a transaction involving the issue of a security by the issuing company or the making of a loan, or a loan of a particular amount, to the issuing company;
c
the rate of interest and other terms that might be expected to be applicable in any particular case to such a transaction.
6
In this paragraph “special relationship” means any relationship by virtue of which the condition in paragraph 1(1)(b) above is satisfied in the case of the affected persons.
7
In this paragraph any reference to a guarantee includes a reference to a surety and to any other relationship, arrangements, connection or understanding (whether formal or informal) such that the person making the loan to the issuing company has a reasonable expectation that in the event of a default by the issuing company he will be paid by, or out of the assets of, one or more companies.
8
For the purposes of this paragraph, the cases where one company has a “participatory relationship”with another are those where—
a
one of them is directly or indirectly participating in the management, control or capital of the other; or
b
the same person or persons is or are directly or indirectly participating in the management, control or capital of each of them.
9
In this paragraph “security” includes securities not creating or evidencing a charge on assets.
10
For the purposes of this paragraph—
a
interest payable by a company on money advanced without the issue of a security for the advance, or
b
other consideration given by a company for the use of money so advanced,
shall be treated as if payable or given in respect of a security issued for the advance by the company, and references in this paragraph to a security shall be construed accordingly.
Sch. 28AA modified (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 58(1) (as amended by 2004 c. 12, s. 37, Sch. 5 para. 12) (with Sch. 22 para. 58(3))