Income Tax Act 2007

Disposals U.K.

360 Disposal of loan during 5 year period U.K.

(1) If the investment consists of a loan and within the 5 year period—

(a) the investor disposes of the whole of the investment, otherwise than by way of a permitted disposal, or

(b) the investor disposes of a part of the investment,

any CITR attributable to the investment in respect of any tax year must be withdrawn.

(2) For the purposes of this section—

(a) a disposal is “permitted” if—

(i) it is by way of a distribution in the course of dissolving or winding up the CDFI,

(ii) it is a disposal within section 24(1) of TCGA 1992 (entire loss, destruction, dissipation or extinction of asset),

(iii) it is a deemed disposal under section 24(2) of that Act (claim that value of asset has become negligible), or

(iv) it is made after the CDFI has ceased to be accredited under this Part, and

(b) a full or partial repayment of the loan is not treated as giving rise to a disposal.

361 Disposal of securities or shares during 5 year period U.K.

(1) This section applies if the investment consists of securities or shares and—

(a) the investor disposes of the whole or any part of the investment (“the former investment”) within the 5 year period,

(b) the CDFI has not ceased to be accredited before the disposal, and

(c) the disposal does not arise as a result of an event within section 366(1)(a) (repayment, redemption or repurchase of securities or shares included in the investment).

(2) If the disposal is not a qualifying disposal, any CITR attributable to the former investment in respect of any tax year must be withdrawn.

(3) If the disposal is a qualifying disposal, any CITR attributable to the former investment [F1 in respect of] a tax year must—

(a) if it is greater than A, be reduced by A, and

(b) in any other case, be withdrawn.

For this purpose “A” is an amount equal to 5% of the amount or value of the consideration (if any) which the investor receives for the former investment.

(4) For the purposes of this section “qualifying disposal” means a disposal that is—

(a) by way of a bargain made at arm's length, or

(b) a permitted disposal (within the meaning of section 360).

(5) If [F2 in respect of] any tax year—

(a) the amount of CITR attributable to the former investment (“B”) is less than

(b) the amount (“C”) which is equal to 5% of the invested amount in respect of the former investment for that year,

subsection (3)(a) has effect in relation to that year as if the amount or value referred to in subsection (3) were reduced by multiplying it by the fraction—

(6) If the amount of CITR attributable to the former investment in respect of a tax year has been reduced before the CITR is obtained, the amount referred to in subsection (5) as B is to be treated for the purposes of that subsection as the amount it would have been without that reduction.

(7) Subsection (6) does not apply to a reduction by virtue of section 358 (attribution: bonus shares).

Textual Amendments

F1 Words in s. 361(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 514(2) (with Sch. 2)

F2 Words in s. 361(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 514(3) (with Sch. 2)