Part 16 Factoring of income etc

Chapter 2 Finance arrangements

Type 2 arrangements

765 Certain tax consequences not to have effect
(1) This section applies if—
(a) there is a type 2 finance arrangement, and
(b) any relevant change in relation to the partnership would have the relevant effect (ignoring this section).
(2) In such a case—
(a) sections 1259 to 1265 of CTA 2009 (partnerships involving companies) are to have effect in relation to the transferor or the person connected with the transferor as if the relevant change in relation to the partnership had not occurred, and
Words in s. 765 inserted (with effect in accordance with Sch. 13 para. 42 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 40
(b) accordingly the finance arrangement is not to have the relevant effect.
(3) The relevant effect is that—
(a) an amount of income on which the transferor or the person connected with the transferor would otherwise have been charged to corporation tax is not so charged,
(b) an amount which would otherwise have been brought into account in calculating for corporation tax purposes any income of the transferor or the person connected with the transferor is not so brought into account, or
(c) the transferor or the person connected with the transferor becomes entitled to an income deduction.
(4) In deciding whether subsection (1)(b) is met assume that amounts of income equal to the payments mentioned in section 763(2)(e) were payable to the partnership before the relevant change in relation to it occurred.
(5) An income deduction is—
(a) a deduction in calculating income for corporation tax purposes, or
(b) a deduction from total profits.
Pt. 16 Ch. 2 restricted by Finance Act 2004 (c. 12), s. 196I(5)(6) (as inserted (with effect in accordance with Sch. 13 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 15 (with Sch. 13 Pt. 4))
Pt. 16 Ch. 2 restricted by Finance Act 2004 (c. 12), s. 196G(2)(3) (as inserted (with effect in accordance with Sch. 13 para. 3 of the amending Act) by Finance Act 2012 (c. 14), Sch. 13 para. 1 (with Sch. 13 Pt. 2))