Part 16Factoring of income etc
Chapter 2Finance arrangements
Type 1 arrangements
759Certain tax consequences not to have effect
1
This section applies if a type 1 finance arrangement would have the relevant effect (ignoring this section).
2
The arrangement is not to have that effect.
3
The relevant effect is that—
a
an amount of income on which the borrower or a person connected with the borrower would otherwise have been charged to corporation tax is not so charged,
b
an amount which would otherwise have been brought into account in calculating for corporation tax purposes any income of the borrower or of a person connected with the borrower is not so brought into account, or
c
the borrower or a person connected with the borrower becomes entitled to an income deduction.
4
But if the borrower is a partnership the relevant effect is that—
a
an amount of income on which a member of the partnership would otherwise have been charged to corporation tax is not so charged,
b
an amount which would otherwise have been brought into account in calculating for corporation tax purposes any income of a member of the partnership is not so brought into account, or
c
a member of the partnership becomes entitled to an income deduction.
5
For the purposes of this section the borrower and the lender are not connected with one another.
6
An income deduction is—
a
a deduction in calculating income for corporation tax purposes, or
b
a deduction from total profits.