Part 8Other reliefs

Chapter 1Interest payments

Loans for investing in partnerships

400Film partnerships

1

This section applies in a tax year if—

a

the partnership (“the film partnership”) carries on a trade,

b

the profits or losses of the trade are calculated in accordance with Chapter 9 of Part 2 of ITTOIA 2005 (films etc),

c

the loan is secured on an asset or activity of another partnership (“the investment partnership”),

d

the individual to whom the loan is made (“A”) is or has been a member of the investment partnership, and

e

at any time in the year the proportion of the profits of the investment partnership to which A is entitled is less than the proportion of that partnership's capital contributed by A at that time.

2

For the purposes of subsection (1)(c), a loan is secured on an asset or activity of a partnership if there is an arrangement—

a

under which such an asset may be used or relied upon wholly or partly to guarantee repayment of any part of the loan, or

b

because of which any part of the loan is expected to be repaid directly or indirectly out of assets held by or income accruing to the partnership.

3

In subsection (1)(e)—

  • “profits” excludes any amount that would not be taken into account as, or for the purposes of calculating, income for income tax purposes, and

  • “partnership's capital” means—

    1. a

      anything that is, or in accordance with generally accepted accounting practice would be, accounted for as partners' capital or partners' equity, and

    2. b

      amounts lent to the partnership by partners or persons connected with partners.

4

So far as the investment partnership's capital includes at any time any of the following amounts, they are treated as amounts contributed by A—

a

any amount A paid to acquire any interest in the partnership, so far as A retains the interest at that time,

b

any amount made available by A directly or indirectly to another person, so far as that person retains any interest in the partnership at that time,

c

any amount A lent to the partnership, so far as it has not been repaid at that time,

d

any amount A made available directly or indirectly to another person, so far as any amount that person lent to the partnership has not been repaid at that time, and

e

an amount made available in any other way prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.

5

Regulations under subsection (4)(e)—

a

may make provision having retrospective effect,

b

may make provision generally or only in relation to specified cases or circumstances,

c

may make different provision for different cases or circumstances,

d

may make transitional, consequential or incidental provision, and

e

may be made only if a draft of them has been laid before and approved by a resolution of the House of Commons.

6

In this section a reference to A includes a reference to a person connected with A.

7

Section 993 (meaning of “connected” persons) applies for the purposes of this section with the omission of subsections (3) to (7).