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Income and Corporation Taxes Act 1988
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Changes over time for: Section 421
Version Superseded: 01/04/2010
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421Taxation of borrower when loan under section 419 released etcU.K.
(1)Subject to the following provisions of this section, where a company is assessed or liable to be assessed under section 419 in respect of a loan or [F1advance made to the trustees of a [F2settlement] and after the [F2settlement] has ended] releases or writes off the whole or part of the debt in respect of it, then—
(a)for the purpose of computing [F3 the income of the person from whom the debt was due (“the debtor”) for corporation tax purposes], a sum equal to the amount so released or written off shall be treated as income received by [F4the debtor] after deduction of income tax [F5at the [F6[F7dividend] ordinary rate]] from a corresponding gross amount;
(b)no repayment of income tax shall be made in respect of that income and [F8the debtor shall not be liable to pay corporation tax at the dividend] ordinary rate on that income;
(c)F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)This section shall be construed as one with section 419.
Textual Amendments
F1Words in s. 421(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(2)(a) (with Sch. 2)
F2Words in s. 421(1) substituted (6.4.2006) by Finance Act 2006 (c. 25), Sch. 13 paras. 13, 27(1)
F3Words in s. 421(1)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(2)(b) (with Sch. 2)
F4Words in s. 421(1)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(2)(b) (with Sch. 2)
F5Words in s. 421(1)(a) inserted (27.7.1993 with effect for the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 77(4)(a)(5)
F6Words in s. 421(1)(a)(b) substituted (with effect in accordance with Sch. 4 para. 11(2) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 11(1)(a)
F7Words in s. 421(1)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(2)(b) (with Sch. 2)
F8Words in s. 421(1)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(2)(c) (with Sch. 2)
F9S. 421(1)(c)(d) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(2)(d), Sch. 3 (with Sch. 2)
F10S. 421(2)(3) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 174(3), Sch. 3 (with Sch. 2)
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