375Loans to close companies by participators etcU.K.
(1)The case to which this section applies is where—
(a)there is a time in the actual accrual period when the close company conditions are met, and
(b)neither the CIS-based close company conditions nor the CIS limited partnership conditions are met
[F1and, where subsection (4A) applies, the non-qualifying territory condition is met. ]
(2)The close company conditions are that—
(a)the company which has the debtor relationship (“D”) is a close company, and
(b)a person (“C”) standing in the position of creditor as respects the loan relationship is—
(i)a participator in D,
(ii)the associate of a person who is participator in D,
(iii)a company of which a participator in D has control,
(iv)a company in which a participator in D has a major interest,
(v)a person who controls a company which is a participator in D,
(vi)the associate of a person within sub-paragraph (v), or
(vii)a company controlled by a person within sub-paragraph (v).
(3)The CIS-based close company conditions are that—
(a)D is a CIS-based close company at all times when the close company conditions are met,
(b)C is not resident [F2for tax purposes] in a non-qualifying territory at any such time, and
(c)D is a small or medium-sized enterprise for the actual accrual period.
(4)The CIS limited partnership conditions are that—
(a)the debt is one which is owed to, or to persons acting for, a CIS limited partnership,
(b)no member of that partnership is resident [F3for tax purposes] in a non-qualifying territory at any time in the actual accrual period,
(c)D has received written notice from the partnership containing information from which it appears that the condition in paragraph (b) is met, and
(d)D is a small or medium-sized enterprise for the actual accrual period.
[F4(4A)This subsection applies if C is a company; and the non-qualifying territory condition is that C is—
(a)resident for tax purposes in a non-qualifying territory at any time in the actual accrual period, or
(b)effectively managed in a non-taxing non-qualifying territory at any such time.]
(5)Section 376 applies for the interpretation of this section.
Textual Amendments
F1Words in s. 375(1) inserted (with effect in accordance with Sch. 20 para. 9 of the amending Act) by Finance Act 2009 (c. 10), Sch. 20 para. 3(2)
F2Words in s. 375(3)(b) inserted (with effect in accordance with Sch. 20 para. 9 of the amending Act) by Finance Act 2009 (c. 10), Sch. 20 para. 3(3)
F3Words in s. 375(4)(b) inserted (with effect in accordance with Sch. 20 para. 9 of the amending Act) by Finance Act 2009 (c. 10), Sch. 20 para. 3(3)
F4S. 375(4A) inserted (with effect in accordance with Sch. 20 para. 9 of the amending Act) by Finance Act 2009 (c. 10), Sch. 20 para. 3(4)
Modifications etc. (not altering text)
C1S. 375 excluded by S.I. 2006/3296, reg. 19(1) (as substituted (with effect in accordance with reg. 1(2)(3) of the amending S.I.) by The Taxation of Securitisation Companies (Amendment) Regulations 2018 (S.I. 2018/143), regs. 1(1), 10(3))