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” F1is to be read in accordance with section 34 of CTA 2010, and

“associated company” has the meaning given by F2section 449 of CTA 2010.

(5)

This section is subject to section 411 (ineligibility of interest where business is occupation of commercial woodlands).