Part IVIncome Tax, Corporation Tax and Capital Gains Tax
Chapter IILoan relationships
Introductory provisions
81Meaning of “loan relationship” etc
1
Subject to the following provisions of this section, a company has a loan relationship for the purposes of the Corporation Tax Acts wherever—
a
the company stands (whether by reference to a security or otherwise) in the position of a creditor or debtor as respects any money debt; and
b
that debt is one arising from a transaction for the lending of money;
and references to a loan relationship and to a company’s being a party to a loan relationship shall be construed accordingly.
2
For the purposes of this Chapter a money debt is a debt which falls to be settled—
a
by the payment of money; or
b
by the transfer of a right to settlement under a debt which is itself a money debt.
3
Subject to subsection (4) below, where an instrument is issued by any person for the purpose of representing security for, or the rights of a creditor in respect of, any money debt, then (whatever the circumstances of the issue of the instrument) that debt shall be taken for the purposes of this Chapter to be a debt arising from a transaction for the lending of money.
4
For the purposes of this Chapter a debt shall not be taken to arise from a transaction for the lending of money to the extent that it is a debt arising from rights conferred by shares in a company.
5
For the purposes of this Chapter—
a
references to payments or interest under a loan relationship are references to payments or interest made or payable in pursuance of any of the rights or liabilities under that relationship; and
b
references to rights or liabilities under a loan relationship are references to any of the rights or liabilities under the agreement or arrangements by virtue of which that relationship subsists;
and those rights or liabilities shall be taken to include the rights or liabilities attached to any security which, being a security issued in relation to the money debt in question, is a security representing that relationship.
6
In this Chapter “money” includes money expressed in a currency other than sterling.