Corporation Tax Act 2010

Interest etc paid in respect of certain securities U.K.

107 (1) Section 1032(1) does not apply in the case of any interest or other distribution which is paid in respect of a security of the borrower that meets Condition C in section 1015 (securities under which the consideration for the use of the principal secured is dependent on the results of the company's business) if— U.K.

(a) the principal secured does not exceed £100,000,

(b) the borrower is under an obligation to repay the principal and interest before the end of the period of 5 years beginning on the date on which the principal was paid to the borrower,

(c) that obligation was entered into before 9 March 1982 or was entered into before 1 July 1982 in pursuance of negotiations which were in progress on 9 March 1982, and

(d) where the period for repayment of either principal or interest is extended after 8 March 1982 (but paragraph (b) still applies), the interest or other distribution is paid within the period applicable immediately before that date.

(2) For the purposes of sub-paragraph (1)(c) negotiations are not regarded as having been in progress on 9 March 1982 unless, before that date, the borrower—

(a) had applied to the lender for a loan, and

(b) had supplied the lender with any documents required by the lender to support the application.