Finance Act 1974

Provisions supplementary to paragraphs 9 to 12

13 If at any time after the application of the proceeds of the loan the individual has recovered any amount of capital from the close company or partnership without using that amount in repayment of the loan, he shall be treated for the purposes of section 75 of the Finance Act 1972 and this Part of this Schedule as if he had at that time repaid that amount out of the loan, so that out of the interest otherwise eligible for relief (or, where paragraph 15 of Schedule 9 to that Act applies, out of the proportion so eligible) and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered.

14 (1) The individual shall be treated as having recovered an amount of capital from the close company or partnership if—

(a) he receives consideration of that amount or value for the sale, exchange or assignment of any part of the ordinary share capital of the company or of his interest in the partnership, or any consideration of that amount or value by way of repayment of any part of that ordinary share capital; or

(b) the close company or partnership repays that amount of a loan or advance from him or the partnership returns that amount of capital to him ; or

(c) he receives consideration of that amount or value for assigning any debt due to him from the close company or partnership ;

and where a sale or assignment is not a bargain made at arm's length, the sale or assignment shall be deemed to be for a consideration of an amount equal to the market value of what is disposed of.

(2) In the application of this paragraph to Scotland for the word " assignment ", wherever it occurs, there shall be substituted the word "" assignation ".

15 Paragraph 10 or, as the case may be, 12 and paragraphs 13 and 14 above shall apply to a loan within paragraph 9(c) or 11(c) above as if it, and any loan it replaces, were one loan, and so that—

(a) references to the application of the proceeds of the loan are references to the application of the proceeds of the original loan; and

(b) any restriction under paragraph 13 above which applies to any loan which has been replaced shall apply to the loan which replaces it.

16 In paragraphs 9 and 10 above expressions to which a meaning is assigned by Chapter III or Part XI of the Taxes Act have that meaning.