Finance (No. 2) Act 2017

Quasi-loans made in a depreciating currency U.K.

17 (1) Paragraph 18 applies in relation to the quasi-loan if— U.K.

(a) the quasi-loan currency is a currency other than sterling, and

(b) it is reasonable to suppose that the main reason, or one of the main reasons, for the quasi-loan being made in that currency is that the quasi-loan currency is expected to depreciate during the quasi-loan period.

(2) The “quasi-loan period”, in relation to a quasi-loan, is the period—

(a) beginning at the time the quasi-loan is made, and

(b) ending with the time by which, under the terms of the quasi-loan, the whole of the quasi-loan is to be repaid.

18 (1) Where this paragraph applies in relation to the quasi-loan— U.K.

(a) paragraphs 15 and 16 do not apply in relation to the quasi-loan, and

(b) sub-paragraphs (2) to (5) apply for the purposes of calculating the amount of the quasi-loan that is outstanding at the time P is treated as taking the relevant step [F1 within paragraph 1].

(2) The initial debt amount, in relation to the quasi-loan, is an amount equal to the total of—

(a) the value in sterling, at the reference date, of the acquired debt, and

(b) the value in sterling, at the reference date, of any additional debt.

(3) The “reference date”—

(a) in relation to a right within sub-paragraph (2)(a), means the date on which P acquires it, and

(b) in relation to a right within sub-paragraph (2)(b), means the date on which P acquires it.

(4) The repayment amount, in relation to the quasi-loan, is an amount equal to the total of—

(a) the amount of the initial debt amount that has been repaid in sterling, and

(b) where payments are made, in a currency other than sterling, by way of repayment of the initial debt amount, the amount equal to the sterling value of the payments.

(5) The “sterling value” of a payment is its value in sterling on the date it is made.

Textual Amendments

F1 Words in Sch. 11 para. 18(1)(b) inserted (22.7.2020) by Finance Act 2020 (c. 14), Sch. 2 para. 37