SCHEDULES

SCHEDULE 25Loan relationships

Part 1Amendments of the Finance Act 1996

33Discounted securities where companies have a connection

1

Paragraph 17 of Schedule 9 is amended as follows.

2

In sub-paragraph (1) (accounting periods to which the paragraph applies) for paragraph (b) substitute—

b

at any time in that period another company stands in the position of a creditor as respects that security;

3

In sub-paragraph (5) (meaning of “connection” between companies) in paragraph (a)(one of the companies has had control of the other in the accounting period or the preceding two years)—

a

omit “, or in the period of two years before the beginning of that period,”; and

b

after “control of” insert “ , or a major interest in, ”.

4

In paragraph (b) of that sub-paragraph (both companies under control of same person in that period or those two years) omit “, or in those two years,”.

5

For sub-paragraph (8) (which defines what it is for the benefit of a security to be available to a company) substitute—

8

Any reference in this paragraph to a person who stands in the position of a creditor as respects a relevant discounted security includes a reference to a person who indirectly stands in that position by reference to a series of relevant discounted securities.

8A

Where this paragraph applies by virtue of sub-paragraph (8) above, the reference to the corresponding creditor relationship in sub-paragraph (1)(d) above is a reference to the creditor relationship of the company which indirectly stands in the position of a creditor as respects the relevant discounted security.

6

For sub-paragraph (9) (meaning of “control”) substitute—

9

For the purposes of this paragraph “control”, in relation to a company, has the same meaning as in section 87 of this Act (see section 87A).

10

Paragraph 20 below (major interests) applies for the purposes of this paragraph.