Section 809BZL: Deemed interest
1160.This section allows income tax relief to be given if there is a type 3 finance arrangement. It is based on section 774D(3), (9) and (11) to (13) of ICTA.
1161.Subsection (1) lays down the conditions for this section to apply and introduces the person (namely, a relevant member, as defined in subsection (5)) eligible for income tax relief.
1162.Subsection (2) permits the relevant member to treat the amount mentioned in subsection (1)(c) as interest payable on a loan. If the relevant statutory conditions are met, the deemed interest qualifies for income tax relief under Chapter 1 of Part 8 of ITA.
1163.Subsection (3) extends subsection (1)(c) to cover the case in which a relevant member prepares accounts which, in accordance with GAAP, record an amount as a finance charge in respect of the advance (even though the partnership does not). This relevant member need not be the relevant member mentioned in subsection (2).
1164.If subsection (2) deems there to be interest payable, subsection (4) determines when it is deemed to be paid.