Part 8Other reliefs
Chapter 1Interest payments
Loans for interests in close companies
392Loan to buy interest in close company
1
This section applies to a loan to an individual that is used in one or more of the ways specified in subsection (2).
2
The ways are—
a
acquiring any part of the ordinary share capital of a close company that is not a close investment-holding company,
b
lending to such a company money which is used wholly and exclusively—
i
for the purposes of the business of the company, or
ii
for the purposes of the business of any associated company of the company which is also a close company that is not a close investment-holding company, or
c
repaying another loan to which this section applies.
3
Subsection (2)(a) does not apply if at any time the individual by whom the shares are acquired or that individual's spouse or civil partner—
a
makes a claim for relief in respect of them under Part 5 of this Act or, in the case of shares issued before 6 April 2007, Chapter 3 of Part 7 of ICTA (enterprise investment scheme), or
b
makes a claim in respect of them under Schedule 5B to TCGA 1992 (enterprise investment scheme: reinvestment).
4
In this section and section 393—
“close investment-holding company” has the meaning given by section 13A(1) of ICTA (companies not qualifying for small companies' relief), and
“associated company” has the meaning given by section 416 of ICTA.
5
This section is subject to section 411 (ineligibility of interest where business is occupation of commercial woodlands).