Part 6Relationships treated as loan relationships etc
Chapter 6Alternative finance arrangements
Arrangements that are alternative finance arrangements
506Profit share agency arrangements
1
This section applies to arrangements if under them—
F1a
a person (“the principal”) appoints an agent,
ab
one or both of the principal and agent is a financial institution,
b
the agent uses money provided by the principal with a view to producing a profit,
c
the principal is entitled, to a specified extent, to profits resulting from the use of the money,
d
the agent is entitled to any additional profits resulting from its use (and may also be entitled to a fee paid by the principal), and
e
payments made because of the principal's entitlement to profits equate, in substance, to the return on an investment of money at interest.
2
This section is subject to section 508 (provision not at arm's length: exclusion of arrangements from sections 503 to 505, this section and section 507).