Part 5Loan Relationships
Chapter 15Tax avoidance
Unallowable purposes and tax relief schemes
443Restriction of relief for interest where tax relief schemes involved
1
A company may not bring a debit into account for the purposes of this Part in respect of interest if a tax relief scheme has been effected or tax relief arrangements have been made in relation to the transaction as a result of which the interest would be taken into account.
2
Subsection (1) applies whether the tax relief scheme is effected or the tax relief arrangements are made before or after the transaction.
3
A scheme is a tax relief scheme in relation to a transaction for the purposes of subsection (1) if it is such that the sole or main benefit that might be expected to accrue to the company from the transaction is the obtaining of a reduction in tax liability by bringing the debit into account.
4
Arrangements are tax relief arrangements in relation to a transaction for the purposes of subsection (1) if they are such that the sole or main benefit which might be expected to accrue to the company from the transaction is the obtaining of a reduction in tax liability by bringing the debit into account.
5
Subsection (6) applies if relief is claimed as a result of section 403 of ICTA (amounts which may be surrendered by way of group relief)—
a
in respect of trading losses in a case where, in calculating those losses, debits in respect of loan relationships are treated under section 297(3) as expenses of the trade, or
b
in respect of a deficit to which Chapter 16 (non-trading deficits) applies.
6
Any question arising under this section as to what benefit might be expected to accrue from a transaction is to be determined by reference to the claimant company and the surrendering company taken together.
7
In this section “the claimant company” and “the surrendering company” have the same meaning as in section 402 of ICTA (see subsection (1) of that section).