3A

For the purposes of this Chapter, a commercial rate of interest, in the case of a company and any asset, is—

a

a rate (“the simple commercial rate”) that is reasonably comparable to the rate that the company could obtain by placing on deposit the money it invested in the asset, or

b

in any case where—

i

the likely rate of increase in the value of the asset is in question, and

ii

that likely rate is a lower rate than the simple commercial rate, and

iii

the difference is a result of an expectation that the company would also obtain a tax advantage as a result of investing in the asset,

that lower rate.

3B

In subsection (3A) above, “tax advantage” has the meaning given by section 709(1) of the Taxes Act 1988.