Part 7Community investment tax relief
Chapter 6Supplementary and general
Alternative finance arrangements
257Purchase and resale arrangements
1
This section applies if, under arrangements to which section 503 of CTA 2009 applies, a person (“the first purchaser”) purchases an asset that is sold to another person (“the second purchaser”).
2
This Part has effect in relation to the arrangements in accordance with subsections (3) to (9).
3
The first purchaser is treated as making a loan to the second purchaser.
4
The amount of the loan is treated as being equal to the first purchase price.
5
If the arrangements provide that the first purchaser will transfer ownership of the asset to the second purchaser in instalments—
a
references to the loan being drawn down over a period of time include references to the asset being transferred to the second purchaser in instalments,
b
references to the date on which the first amount of the loan is drawn down include references to the date on which the first instalment is transferred to the second purchaser, and
c
references to the amount drawn down at a given date include references to the value of the instalments transferred at that date.
6
In calculating the amount of capital outstanding on the loan, each payment of the second purchase price (or part of the second purchase price), as reduced by any amount of alternative finance return (within the meaning of Chapter 6 of Part 6 of CTA 2009) included within each payment, is treated as repayment of the loan capital.
7
References to the beneficial owner of the loan include references to the person beneficially entitled to payment of the second purchase price.
8
References to the disposal of the whole or any part of the loan include references to the disposal of the right to receive payment of the whole or any part of the outstanding second purchase price.
9
If arrangements to which section 503 of CTA 2009 applies are, by virtue of this section, qualifying investments under Chapter 2 of this Part, paragraph (f) of section 249(1) above is to be ignored in relation to the arrangements concerned.
10
In this section “the first purchase price” and “the second purchase price” have the same meaning as in section 503 of CTA 2009.