(This note is not part of the Order)
This Order amends Chapter 5 of Part 2 of the Finance Act 2005 in order to allow alternative finance arrangements that fall within section 47, 49 or 49A of the Finance Act 2005 to be treated as loans for the purposes of Community Investment Tax Relief (CITR).
Article 1 provides for the citation and commencement of this Order.
Article 2 inserts a new section 54A into the Finance Act 2005 which applies for the purposes of Schedule 16 to Finance Act 2002 (FA 2002), Part 7 of Income Tax Act 2007 (ITA 2007), regulations made under or having effect as if made under paragraph 4 of Schedule 16 to FA 2002 and regulations made under section 340 or 341 of ITA 2007 (collectively referred to below as the specified enactments).
New section 54A(2)(a) and (b) provides that the specified enactments have effect as if references to a loan included references to arrangements falling within section 47, 49 or 49A of the Finance Act 2005 and references to interest included references to alternative finance return or profit share return.
New section 54A(3) sets out how references to the mechanics of a loan in the specified enactments are equated to the mechanics of a section 47 arrangement.
New section 54A(4) excludes a section 47 arrangement which is, by virtue of new section 54A, a qualifying investment under the specified enactments, from paragraph 35(1)(f) of Schedule 16 to FA 2002 and section 366(1)(f) of ITA 2007 which would otherwise treat the investor as receiving value under the specified enactments.
New section 54A(5) sets out how references to the mechanics of a loan in the specified enactments are equated to the mechanics of a section 49 arrangement.
New section 54A(6) sets out how references to the mechanics of a loan in the specified enactments are equated to the mechanics of a section 49A arrangement.
A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.