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Finance Act 2012

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Certain tax consequences not to have effectE+W+S+N.I.

9(1)This paragraph applies if—E+W+S+N.I.

(a)the section which would have applied as mentioned in paragraph 4(1)(c) above is section 196B of FA 2004, and

(b)the asset-backed arrangement would have the relevant effect (ignoring this paragraph).

(2)The asset-backed arrangement is not to have the relevant effect.

(3)The relevant effect is that—

(a)an amount of income on which the borrower or a person connected with the borrower would otherwise have been charged to tax is not so charged,

(b)an amount which would otherwise have been brought into account in calculating for tax purposes any income of the borrower or of a person connected with the borrower is not so brought into account, or

(c)the borrower or a person connected with the borrower becomes entitled to deduct an amount—

(i)in calculating income for tax purposes, or

(ii)from total income or total profits (as the case may be).

(4)But if the borrower is a partnership the relevant effect is that—

(a)an amount of income on which a member of the partnership would otherwise have been charged to tax is not so charged,

(b)an amount which would otherwise have been brought into account in calculating for tax purposes any income of a member of the partnership is not so brought into account, or

(c)a member of the partnership becomes entitled to deduct an amount—

(i)in calculating income for tax purposes, or

(ii)from total income or total profits (as the case may be).

(5)In sub-paragraphs (3) and (4) “amount” means an amount which arises on or after 29 November 2011 but on or before the completion day.

10(1)This paragraph applies if—E+W+S+N.I.

(a)the section which would have applied as mentioned in paragraph 4(1)(c) above is section 196C of FA 2004, and

(b)any relevant change in relation to the partnership would have the relevant effect (ignoring this paragraph).

(2)In such a case—

(a)Part 9 of ITTOIA 2005 or sections 1259 to 1265 of CTA 2009 (as the case may be) is or are to have effect in relation to the transferor, or any person connected with the transferor, as if the relevant change in relation to the partnership had not occurred, and

(b)accordingly, the asset-backed 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 tax is not so charged,

(b)an amount which would otherwise have been brought into account in calculating for 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 deduct an amount—

(i)in calculating income for tax purposes, or

(ii)from total income or total profits (as the case may be).

(4)In sub-paragraph (3) “amount” means an amount which arises on or after 29 November 2011 but on or before the completion day.

(5)In deciding whether sub-paragraph (1)(b) is met assume that amounts of income equal to the payments mentioned in section 196C(2)(g) of FA 2004 were payable to the partnership before the relevant change in relation to it occurred.

11(1)This paragraph applies if—E+W+S+N.I.

(a)the section which would have applied as mentioned in paragraph 4(1)(c) above is section 196D of FA 2004, and

(b)any relevant change in relation to the partnership would have the relevant effect (ignoring this paragraph).

(2)The relevant effect is that—

(a)an amount of income on which a relevant member would otherwise have been charged to tax is not so charged,

(b)an amount which would otherwise have been brought into account in calculating for tax purposes any income of a relevant member is not so brought into account, or

(c)a relevant member becomes entitled to deduct an amount—

(i)in calculating income for tax purposes, or

(ii)from total income or total profits (as the case may be).

(3)A relevant member is a person who—

(a)was a member of the partnership immediately before the relevant change in relation to it occurred, and

(b)is not the lender.

(4)In sub-paragraph (2) “amount” means an amount which arises on or after 29 November 2011 but on or before the completion day.

(5)If this paragraph applies—

(a)Part 9 of ITTOIA 2005 or sections 1259 to 1265 of CTA 2009 (as the case may be) is or are to have effect in relation to any relevant member as if the relevant change in relation to the partnership had not occurred, and

(b)accordingly, the asset-backed arrangement is not to have the relevant effect.

(6)In deciding whether sub-paragraph (1)(b) is met assume that amounts of income equal to the payments mentioned in section 196D(2)(e) of FA 2004 were payable to the partnership before the relevant change in relation to it occurred.

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