Finance Act 1995 (c. 4)

SCHEDULES

SCHEDULE 22 U.K. Prevention of exploitation of [F1 SCHEDULE 2 TO ITTOIA 2005 (SO FAR AS RELATING TO OVERLAP PROFIT) ]

Textual Amendments

F1 Words in Sch. 22 heading substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 484(12) (with Sch. 2)

Part I U.K. Cases I and II of Schedule D

Increase of profits or gains of transitional overlap period U.K.

5 (1) This paragraph applies where, in the case of a trade or profession carried on by any person in partnership with other persons— U.K.

(a) [F2 paragraph 52 of Schedule 2 to ITTOIA 2005] applies with or without the modification made by paragraph 3(2) above;

(b) a claim is made under [F3 section 383 of the Income Tax Act 2007 (relief for interest payments)] in respect of interest on a loan to defray money contributed or advanced by him (“the partner”) to the partnership; and

(c) sub-paragraph (2) below applies to any of the money so contributed or advanced.

(2) This sub-paragraph applies to money so contributed or advanced unless it was contributed or advanced wholly or mainly—

(a) for bona fide commercial reasons; or

(b) for a purpose other than the reduction of the partnership’s borrowings for a relevant period.

(3) Subject to sub-paragraph (4) below, [F4 paragraph 52 of Schedule 2 to ITTOIA 2005] shall have effect as if the reference to the transitional overlap profit were a reference to the difference between that profit and the amount of interest paid by the partner in respect of the transitional overlap period on money to which sub-paragraph (2) above applies.

(4) Sub-paragraph (3) above does not apply where—

(a) the loan was made before 1st April 1994; or

(b) the aggregate amount of interest paid as mentioned in that sub-paragraph is less than such amount as may be prescribed by regulations made by the Board.

(5) In this paragraph—

• “relevant period” means a period the whole or part of which falls within the transitional overlap period;

• “the transitional overlap period” has the same meaning as in paragraph 3 above;

• “the transitional overlap profit” means the amount mentioned in [F5 paragraph 52(2) of Schedule 2 to ITTOIA 2005] (whether having effect with or without the modification made by paragraph 3(2) above).

Textual Amendments

F2 Words in Sch. 22 para. 5(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 484(5)(a) (with Sch. 2)

F3 Words in Sch. 22 para. 5(1)(b) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 370(2) (with Sch. 2)

F4 Words in Sch. 22 para. 5(3) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 484(5)(b) (with Sch. 2)

F5 Words in Sch. 22 para. 5(5) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 484(5)(c) (with Sch. 2)