3(1)Where—U.K.
(a)two or more of the parties to the relevant arrangements are connected persons, and
(b)the terms of those arrangements are not such as would reasonably have been expected if those persons had been dealing at arm’s length,
the whole amount or value of the reverse premium shall be brought into account under paragraph 2(2) or (3) in the first relevant period of account.
(2)The “first relevant period of account” means the period of account in which the relevant transaction is entered into, subject to sub-paragraph (3).
(3)If the relevant transaction is entered into—
(a)by [F1the company receiving] the reverse premium, and
(b)for the purposes of a trade, profession or vocation which is not then carried on [F2by the company but which it] subsequently begins to carry on,
the first relevant period of account is the first period of account in which [F3the company carries] on the trade, profession or vocation.
(4)The condition in sub-paragraph (1)(b) is met if the terms differ to a significant extent from the terms which at the time the arrangements were entered into would be regarded as normal and reasonable in the market conditions then prevailing between persons dealing with each other at arm’s length in the open market.
F4(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Words in Sch. 6 para. 3(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 509(4)(a) (with Sch. 2)
F2Words in Sch. 6 para. 3(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 509(4)(b) (with Sch. 2)
F3Words in Sch. 6 para. 3(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 509(4)(c) (with Sch. 2)
F4Sch. 6 para. 3(5) repealed (24.7.2002) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(16)