888AQualifying private placements

1

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on a qualifying private placement.

2

“Qualifying private placement” means a security—

a

which represents a loan relationship to which a company is a party as debtor,

b

which is not listed on a recognised stock exchange, and

c

in relation to which such other conditions as the Treasury may specify by regulations are met.

3

The conditions which may be specified under subsection (2)(c) include conditions relating to—

a

the security itself,

b

the loan relationship represented by the security,

c

the terms on which, or circumstances under which, the security or loan relationship is entered into,

d

the company which is party to the loan relationship as debtor,

e

any person by or through whom a payment of interest on the security is made, or

f

the holder of the security.

4

Regulations under this section may make provision about the consequences of failing to make a deduction under section 874, in respect of a payment of interest on a security, in cases where the person required to make the deduction had a reasonable, but mistaken, belief that the security was a qualifying private placement.

5

Regulations under this section may—

a

make different provision for different cases;

b

contain incidental, supplemental, consequential and transitional provision and savings.

6

In this section “loan relationship” has the same meaning as in Part 5 of CTA 2009.