Valid from 19/07/2006
Textual Amendments
F1Ss. 774A-774G and preceding cross-heading inserted (with effect in accordance with Sch. 6 para. 6(2)-(7) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 6(1)
(1)For the purposes of section 774D an arrangement is a structured finance arrangement in relation to a partnership (“the borrower partnership”) if condition A or B is met in relation to the borrower partnership.
(2)Condition A is that—
(a)a person (“the transferor partner”) disposes of an asset (“the security”) under the arrangement to the borrower partnership,
(b)the transferor partner is a member of the borrower partnership immediately after the disposal (whether or not a member immediately before the disposal),
(c)under the arrangement the borrower partnership receives from another person (“the lender”) any money or other asset (“the advance”) in any period,
(d)in accordance with generally accepted accounting practice the accounts of the borrower partnership for that period record a financial liability in respect of the advance,
(e)there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender (see subsection (6)),
(f)under the arrangement the share of the lender or person connected with the lender in the profits of the borrower partnership is determined by reference (wholly or partly) to payments in respect of the security, and
(g)in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower partnership.
(3)For the purposes of condition A, references to the accounts of the borrower partnership include the accounts of the transferor partner.
(4)Condition B is that—
(a)the borrower partnership holds an asset (“the security”) as a partnership asset at any time before the arrangement is made,
(b)under the arrangement the borrower partnership receives from another person (“the lender”) any money or other asset (“the advance”) in any period,
(c)in accordance with generally accepted accounting practice the accounts of the borrower partnership for that period record a financial liability in respect of the advance,
(d)there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender,
(e)under the arrangement the share of the lender or person connected with the lender in the profits of the borrower partnership is determined by reference (wholly or partly) to payments in respect of the security, and
(f)in accordance with generally accepted accounting practice those payments reduce the amount of the financial liability in respect of the advance recorded in the accounts of the borrower partnership.
(5)For the purposes of condition B, references to the accounts of the borrower partnership include the accounts of any person who is a member of the partnership immediately before the arrangement is made.
(6)For the purposes of this section and section 774D there is a relevant change in relation to the membership of the borrower partnership involving the lender or a person connected with the lender if directly or indirectly in consequence of, or otherwise in connection with, the arrangement—
(a)the lender, or a person connected with the lender, becomes a member of the borrower partnership at any time, or
(b)there is at any time a change in the share of a member of the borrower partnership in the profits of the borrower partnership in a case where that member is the lender or a person connected with the lender.
(7)For the purposes of subsection (6)(b) the reference to a person connected with the lender includes a person who at any time becomes connected with the lender directly or indirectly in consequence of, or otherwise in connection with, the arrangement.]