Part IV Income Tax, Corporation Tax and Capital Gains Tax
Chapter II Interest Rate and Currency Contracts
Anti-avoidance and related provisions
168 Qualifying contracts with non-residents.
(1)
Subject to subsections (3) to (5) below, subsections (4) and (5) of section 167 above (“the relevant subsections”) also apply where, as a result of any transaction entered into on or after a qualifying company’s commencement day—
(a)
the qualifying company and a non-resident, that is, a person who is not resident in the United Kingdom, both become party to a qualifying contract;
(b)
the qualifying company becomes party to a qualifying contract to which a non-resident is party; or
(c)
a non-resident becomes party to a qualifying contract to which the qualifying company is party.
(2)
For the purposes of the relevant subsections as so applied, the definition of “relevant accounting period” in subsection (10) of that section shall have effect as if—
(a)
any reference to a relevant transaction were a reference to the transaction mentioned in subsection (1) above; and
(b)
in paragraph (b), for the words “it is” there were substituted the words “both it and the non-resident are”.
(3)
The relevant subsections shall not apply where the qualifying company is a bank, building society or financial trader and—
(a)
it holds the qualifying contract solely for the purposes of a trade or part of a trade carried on by it in the United Kingdom, and
(b)
it is party to the contract otherwise than as agent or nominee of another person.
(4)
The relevant subsections shall not apply where—
(a)
the non-resident holds the qualifying contract solely for the purposes of a trade or part of a trade carried on by him in the United Kingdom through a branch or agency, and
(b)
he is party to the contract otherwise than as agent or nominee of another person.
(5)
The relevant subsections shall not apply where arrangements made with the government of the territory in which the non-resident is resident—
(a)
have effect by virtue of section 788 of the Taxes Act 1988, and
(b)
make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements).
(6)
Where the non-resident is party to the contract as agent or nominee of another person, subsection (5) above shall have effect as if the reference to the territory in which the non-resident is resident were a reference to the territory in which that other person is resident.