Finance Act 1995

Valid from 01/05/1995

5 (1) This paragraph applies where, in the case of a trade or profession carried on by any person in partnership with other persons— U.K.

(a) paragraph 2(4) of Schedule 20 to the M1 Finance Act 1994 applies with or without the modification made by paragraph 3(2) above;

(b) a claim is made under section 353 of the Taxes Act 1988 (relief for interest: general provision) in respect of interest on a loan to defray money contributed or advanced by him (“the partner”) to the partnership; and

(c) sub-paragraph (2) below applies to any of the money so contributed or advanced.

(2) This sub-paragraph applies to money so contributed or advanced unless it was contributed or advanced wholly or mainly—

(a) for bona fide commercial reasons; or

(b) for a purpose other than the reduction of the partnership’s borrowings for a relevant period.

(3) Subject to sub-paragraph (4) below, the said paragraph 2(4) shall have effect as if the reference to the transitional overlap profit were a reference to the difference between that profit and the amount of interest paid by the partner in respect of the transitional overlap period on money to which sub-paragraph (2) above applies.

(4) Sub-paragraph (3) above does not apply where—

(a) the loan was made before 1st April 1994; or

(b) the aggregate amount of interest paid as mentioned in that sub-paragraph is less than such amount as may be prescribed by regulations made by the Board.

(5) In this paragraph—

• “relevant period” means a period the whole or part of which falls within the transitional overlap period;

• “the transitional overlap period” has the same meaning as in paragraph 3 above;

• “the transitional overlap profit” means the amount mentioned in the said paragraph 2(4) (whether having effect with or without the modification made by paragraph 3(2) above).

Marginal Citations

M1 1994 c. 9.