Part 2 U.K.Income tax, corporation tax and capital gains tax

Chapter 5 U.K.Alternative finance arrangements

Arrangements giving rise to profit share return U.K.

49 Alternative finance arrangements: [F1 deposit] U.K.

(1) Subject to section 52, arrangements fall within this section if they are arrangements under which—

(a) a person (“the depositor”) deposits money with a financial institution,

(b) the money, together with money deposited with the institution by other persons, is used by the institution with a view to producing a profit,

(c) from time to time the institution makes or credits a payment to the depositor, in proportion to the amount deposited by him, out of any profit resulting from the use of the money, and

(d) the payments so made or credited by the institution equate, in substance, to the return on an investment of money at interest.

[F2 (2) Amounts paid or credited as mentioned in subsection (1)(c) by a financial institution under arrangements falling within this section are profit share return for the purposes of this Chapter.]

Textual Amendments

F1 Word in s. 49 heading substituted (19.7.2006) by Finance Act 2006 (c. 25), s. 95(2)(b)

F2 S. 49(2) substituted (19.7.2006) by Finance Act 2006 (c. 25), s. 95(2)(a)

[F3 49AAlternative finance arrangements: profit share agency U.K.

(1) Subject to section 52, arrangements fall within this section if they are arrangements under which—

(a) a person (“the principal”) appoints a financial institution as his agent,

(b) the agent uses money provided by the principal with a view to producing a profit,

(c) the principal is entitled, to a specified extent, to profits resulting from the use of the money,

(d) the agent is entitled to any additional profits resulting from the use of the money (and may also be entitled to a fee to be paid by the principal), and

(e) payments in pursuance of the entitlement specified in paragraph (c) equate, in substance, to the return on an investment of the money at interest.

(2) Amounts paid or credited by a financial institution in accordance with an entitlement of the kind specified in subsection (1)(c) are profit share return for the purposes of this Chapter.

(3) The principal shall not be treated for the purposes of the Tax Acts as entitled to profits to which the agent is entitled in accordance with subsection (1)(d) [F4 (and the agent is treated as entitled to the profits specified in subsection (1)(c) and (d))] .]

Textual Amendments

F3 S. 49A inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 95(3)

F4 Words in s. 49A(3) inserted (19.7.2007) by Finance Act 2007 (c. 11), s. 54