Part 13Tax avoidance

F1Chapter 5CLoan or credit transactions

809CZCTax charged on income transferred

(1)

This section applies if—

(a)

under a loan or credit transaction a person transfers income arising from property,

(b)

the person is not, as a result of Chapter 5B (finance arrangements), chargeable to income tax on the income transferred, and

(c)

the person is within the charge to income tax.

(2)

In such a case—

(a)

income tax is charged under this section,

(b)

the tax is charged on an amount equal to the full amount of the income transferred,

(c)

the tax is charged for the tax year in which the transfer takes place, and

(d)

the person who transfers the income is liable for the tax.

(3)

This section does not prejudice the liability of any other person to tax.

(4)

For the purposes of this section a person transfers income if the person surrenders, waives or forgoes it.

(5)

Subsection (6) applies for the purposes of this section if—

(a)

credit is given for the purchase price of property, and

(b)

the rights attaching to the property are such that the buyer's rights to income from the property are suspended or restricted during the life of the debt.

(6)

The buyer must be treated as surrendering income of an amount equal to the income the buyer in effect forgoes by obtaining the credit.

(7)

For the purposes of this section an amount of income payable subject to deduction of income tax must be taken as the amount before deduction of tax.