Income and Corporation Taxes Act 1988

[F1 774E Sections 774B and 774D: exceptions U.K.

(1) Section 774B or 774D does not apply if the whole of the advance under the structured finance arrangement—

(a) is charged to tax on a relevant person (see subsection (7)) as an amount of income,

(b) is brought into account in calculating for tax purposes any income of a relevant person, or

(c) is brought into account for the purposes of any provision of the Capital Allowances Act as a disposal receipt, or proceeds from a balancing event or disposal event, of a relevant person.

For the purposes of this subsection the effect of section 785A (rent factoring of leases of plant or machinery) is to be disregarded.

(2) Subsection (1)(c) is not to be taken as met in any case where—

(a) the receipt or proceeds gives rise to a balancing charge, and

(b) the amount of the balancing charge is limited by any provision of the Capital Allowances Act.

(3) Section 774B or 774D does not apply if, at all times, the whole of the advance under the structured finance arrangement—

(a) is a debtor relationship of a relevant person for the purposes of [F2 Part 5 of CTA 2009] (loan relationships), or

(b) would be a debtor relationship of a relevant person for those purposes if that person were a company within the charge to corporation tax.

For the purposes of this subsection references to a debtor relationship do not include a relationship to which [F3 Chapter 2 of Part 6 of CTA 2009 (relevant non-lending relationships)] applies.

(4) Section 774B or 774D does not apply in so far as the structured finance arrangement is an arrangement in relation to which—

(a) section 263A of the 1992 Act (agreements for sale and repurchase of securities) applies,

[F4 (b) Schedule 13 to the Finance Act 2007 (sale and repurchase of securities) [F5 or Chapter 10 of Part 6 of CTA 2009 (repos)] applies, or]

(c) Chapter 5 of Part 2 of the Finance Act 2005 [F6 or Chapter 6 of Part 6 of CTA 2009] (alternative finance arrangements) has effect.

(5) Section 774B or 774D does not apply in so far as—

(a) the security under the structured finance arrangement is plant or machinery which is the subject of a sale and finance leaseback, or

(b) the structured finance arrangement is an arrangement in relation to which [F7 sections 228B and 228C] of the Capital Allowances Act apply with the modifications contained in section 228F of that Act (lease and finance leaseback).

(6) For the purposes of subsection (5)(a), whether plant or machinery is the subject of a sale and finance leaseback is determined in accordance with section 221 of the Capital Allowances Act.

F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) For the purposes of this section a “relevant person” means—

(a) if section 774B applies, [F9 the borrower under the structured finance arrangement, a person connected with that borrower or (if that borrower is a partnership) a member of the partnership], and

(b) if section 774D applies, a relevant member of the borrower partnership (within the meaning of that section).]

Textual Amendments

F1 Ss. 774A-774G and preceding cross-heading inserted (with effect in accordance with Sch. 6 para. 6(2)-(7) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 6(1)

F2 Words in s. 774E(3)(a) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 228(a) (with Sch. 2 Pts. 1, 2)

F3 Words in s. 774E(3) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 228(b) (with Sch. 2 Pts. 1, 2)

F4 S. 774E(4)(b) substituted (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 9

F5 Words in s. 774E(4)(b) inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 228(c) (with Sch. 2 Pts. 1, 2)

F6 Words in s. 774E(4)(c) inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 228(d) (with Sch. 2 Pts. 1, 2)

F7 Words in s. 774E(5)(b) substituted (with effect in accordance with Sch. 5 para. 17(5)-(9) of the amending Act) by Finance Act 2007 (c. 11), Sch. 5 para. 17(4)

F8 Words in s. 774E(6) omitted (with effect in accordance with Sch. 20 para. 6(19) of the repealing Act) by virtue of Finance Act 2008 (c. 9), Sch. 20 para. 6(18)

F9 Words in s. 774E(7)(a) substituted (with effect in accordance with Sch. 5 para. 7(1)-(5) of the amending Act) by Finance Act 2007 (c. 11), Sch. 5 para. 5