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(1)For the purposes of the Corporation Tax Acts a company has a loan relationship if—
(a)the company stands in the position of a creditor or debtor as respects any money debt (whether by reference to a security or otherwise), and
(b)the debt arises from a transaction for the lending of money.
(2)References to a loan relationship and to a company being a party to a loan relationship are to be read accordingly.
(3)For cases where this Part applies as if a relationship were a loan relationship despite the money debt not arising from a transaction for the lending of money see Chapter 2 of Part 6 (relevant non-lending relationships).
(4)See also the following provisions of Part 6 (under which other matters are treated as loan relationships or rights, payments or profits under loan relationships)—
(a)Chapter 3 (OEICs, unit trusts and offshore funds),
(b)Chapter 4 (building societies),
(c)Chapter 5 (industrial and provident societies),
(d)Chapter 6 (alternative finance arrangements),
(e)Chapter 7 (shares with guaranteed returns etc),
(f)Chapter 8 (returns from partnerships),
(g)Chapter 9 (manufactured interest etc),
(h)Chapter 10 (repos), and
(i)Chapter 11 (investment life insurance contracts).
(5)In this Part “creditor relationship”, in relation to a company, means any loan relationship of the company where it stands in the position of a creditor as respects the debt in question.
(6)In this Part “debtor relationship”, in relation to a company, means any loan relationship of the company where it stands in the position of a debtor as respects the debt in question.
(1)For the purposes of this Part a money debt is a debt which—
(a)falls to be settled—
(i)by the payment of money,
(ii)by the transfer of a right to settlement under a debt which is itself a money debt, or
(iii)by the issue or transfer of any share in any company,
(b)has at any time fallen to be so settled, or
(c)may at the option of the debtor or the creditor fall to be so settled.
(2)For the purposes of subsection (1) any option exercisable by either party to settle the debt in any other way than is mentioned in subsection (1)(a) is ignored.
(3)A money debt is a debt arising from a transaction for the lending of money for the purposes of this Part if an instrument is issued by any person for the purpose of representing—
(a)security for the debt, or
(b)the rights of a creditor in respect of the debt.
(4)A debt does not arise from a transaction for the lending of money for the purposes of this Part so far as it arises from rights conferred by shares in a company.
(5)But see the following provisions (as a result of which some such rights are within this Chapter)—
(a)Chapter 3 of Part 6 (OEICs, unit trusts and offshore funds),
(b)Chapter 7 of that Part (shares with guaranteed returns etc).
(6)For the meaning of “share” see section 476(1).
(1)In this Part “ ”, in relation to a loan relationship, means any disposal or acquisition (in whole or in part) of rights or liabilities under the relationship.
(2)For this purpose the cases where there is taken to be such a disposal and acquisition include those where rights or liabilities under the loan relationship are transferred or extinguished by any sale, gift, exchange, surrender, redemption or release.
(1)For the purposes of this Part references to payments or interest under a loan relationship are references to payments or interest paid or payable in pursuance of any of the rights or liabilities under that relationship.
(2)For the purposes of this Part references to rights or liabilities under a loan relationship are references to any of the rights or liabilities under the arrangements as a result of which that relationship subsists.
(3)For the purposes of this Part rights or liabilities under a loan relationship are taken to include the rights or liabilities attached to any security that is issued in relation to the money debt in question (and so is a security representing that relationship).
(4)But for the treatment of funding bonds see—
(a)section 413 (issue of funding bonds), and
(b)section 414 (redemption of funding bonds).
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