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Corporation Tax Act 2010

Corporation Tax Act 2010

2010 CHAPTER 4

Introduction

Part 16: Factoring of income etc

Chapter 3: Loan or credit transactions
Section 777: Loan or credit transaction defined

2349.This section defines “loan or credit transaction” for the purposes of sections 778 and 779. It is based on section 786(1) and (2) of ICTA.

2350.What is now section 786 of ICTA originally appeared as paragraph 12 of Schedule 13 to FA 1969. It is aimed at artificial arrangements for dressing up payments of interest in another form – for example, arrangements whereby X grants Y an interest-free loan and:

  • Y grants X an annuity while the loan is outstanding; or

  • Y transfers income-bearing assets to X on the understanding that X will return them when the loan is paid off.

2351.Subsection (1) states the scope of the definition.

2352.Subsections (2) and (3) focus on, respectively, the lending of money and the giving of credit.

2353.Subsections (4) and (5) supplement subsections (2) and (3) respectively.

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