SCHEDULES
F1F1F2SCHEDULE 28AA Provision not at arm’s length
Sch. 28AA inserted (with effect in accordance with s. 108(5)-(7) of the amending Act) by Finance Act 1998 (c. 36), s. 108(2), Sch. 16
Guarantees etc
1B
1
This paragraph applies where the actual provision is made or imposed by means of a series of transactions which include—
a
the issuing of a security by a company which is one of the affected persons (“the issuing company”), and
b
the provision of a guarantee by a company which is the other of those persons.
2
Paragraph 1(2)(a) above shall be construed as requiring account to be taken of all factors, including—
a
the question whether the guarantee would have been provided at all in the absence of the special relationship,
b
the amount that would have been guaranteed in the absence of the special relationship, and
c
the consideration for the guarantee and other terms which would have been agreed in the absence of the special relationship,
but this is subject to the following provisions of this paragraph.
3
In a case where—
a
a company provides a guarantee in respect of another company with which it has a special relationship, and
b
it is not part of the first company’s business to provide guarantees generally,
the fact that it is not part of the first company’s business to provide guarantees generally shall be disregarded in construing sub-paragraph (2) above.
4
Paragraph 1(2)(a) above shall be construed as requiring no account to be taken, in the determination of any of the matters mentioned in sub-paragraph (5) below, of (or of any inference capable of being drawn from) any guarantee provided by a company with which the issuing company has a participatory relationship.
5
The matters are—
a
the appropriate level or extent of the issuing company’s overall indebtedness;
b
whether it might be expected that the issuing company and a particular person would have become parties to a transaction involving the issue of a security by the issuing company or the making of a loan, or a loan of a particular amount, to the issuing company;
c
the rate of interest and other terms that might be expected to be applicable in any particular case to such a transaction.
6
The following provisions of paragraph 1A above also apply for the purposes of this paragraph—
a
sub-paragraph (6) (meaning of special relationship);
b
sub-paragraph (7) (construction of references to a guarantee);
c
sub-paragraph (8) (meaning of participatory relationship);
d
sub-paragraph (9) (meaning of security);
e
sub-paragraph (10) (extended meaning of security).
Sch. 28AA repealed (1.4.2010 with effect in accordance with s. 381(1) of the repealing Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), Sch. 8 para. 111, Sch. 10 Pt. 2 (with Sch. 9)