SCHEDULES

SCHEDULE 37Loan relationships: amendments

Part 1Amendments to Schedule 9 to the Finance Act 1996

Discounted securities of close companies

5

1

Paragraph 18 is amended as follows.

2

In sub-paragraph (2C) (reference to person standing in the position of creditor to include person indirectly standing in that position) for the words from “includes a reference” to the end of that sub-paragraph substitute “ includes a reference to a person who indirectly stands in that position by reference to a series of loan relationships or money debts which would be loan relationships if a company directly stood in the position of creditor or debtor ”.

3

After sub-paragraph (3B) (meaning of “control”) insert—

3C

A person who is a participator in a company which controls another company shall be treated for the purposes of this paragraph as also being a participator in that other company.

4

The amendments made by this paragraph have effect in relation to relevant periods beginning on or after 9th April 2003.

5

If, in the case of an issuing company, 9th April 2003 falls in a relevant period beginning before that day—

a

the amendments made by this paragraph also have effect in relation to a proportionate part of the debits of that company relating to the amount of the discount that is referable to that period, and

b

that proportion is the proportion which the part of that period—

i

beginning with 9th April 2003, and

ii

ending with the end of that period,

bears to the whole of that period.

6

Expressions used in sub-paragraph (4) or (5) and in paragraph 18 of Schedule 9 to the Finance Act 1996 (c. 8) have the same meaning in that sub-paragraph as in that paragraph.