F1SCHEDULE 4BTransfers of value by trustees linked with trustee borrowing
Application of proceeds of borrowing for normal trust purposes
6
(1)
For the purposes of this Schedule the proceeds of trustee borrowing are applied for normal trust purposes in the following circumstances, and not otherwise.
(2)
They are applied for normal trust purposes if they are applied by the trustees in making a payment in respect of an ordinary trust asset and the following conditions are met—
(a)
the payment is made under a transaction at arm’s length or is not more than the payment that would be made if the transaction were at arm’s length;
(b)
the asset forms part of the settled property immediately after the material time or, if it does not do so, the alternative condition in paragraph 8 below is met; and
(c)
the sum paid is (or but for section 17 or 39 would be) allowable under section 38 as a deduction in computing a gain accruing to the trustees on a disposal of the asset.
(3)
They are applied for normal trust purposes if—
(a)
they are applied by the trustees in wholly or partly discharging a loan obligation of the trustees, and
(b)
the whole of the proceeds of the borrowing connected with that obligation (or all but an insignificant amount) have been applied by the trustees for normal trust purposes.
(4)
They are applied for normal trust purposes if they are applied by the trustees in making payments to meet bona fide current expenses incurred by them in administering the settlement or any of the settled property.