F2Part 10AAlternative finance arrangements
F4Meaning of “alternative finance return”
S. 564I and cross-heading inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 2 para. 10 (with Sch. 9 paras. 1-9, 22)
564IPurchase and resale arrangements
1
In the case of purchase and resale arrangements, so much of the second purchase price as is specified under the following provisions of this section is alternative finance return for the purposes of this Part.
2
If under the arrangements the whole of the second purchase price is paid on one day, the alternative finance return equals the amount by which the second purchase price exceeds the first purchase price.
3
If under the arrangements the second purchase price is paid by instalments, the alternative finance return in each instalment equals the appropriate amount.
4
The appropriate amount is an amount equal to the interest which would have been included in the instalment on the assumptions in subsection (5).
5
The assumptions are that—
a
interest is payable on a loan by the first purchaser to the second purchaser of an amount equal to the first purchase price,
b
the total interest payable on the loan is equal to the amount by which the second purchase price exceeds the first purchase price,
c
the instalment is a part repayment of the principal of the loan with interest, and
d
the loan is made on arm's length terms and accounted for under generally accepted accounting practice.
6
In this section expressions used in section 564C have the same meaning as in that section.
564JF7Purchase and resale arrangements where return in foreign currency
1
If, in the case of purchase and resale arrangements, alternative finance return is paid in a currency other than sterling—
a
by or to a person other than a company, and
b
otherwise than for the purposes of a trade, profession or vocation or a property business,
subsections (2) and (3) apply as respects that person.
2
The amount of the excess referred to in section 564I(2) and (5)(b) and the appropriate amount for the purposes of section 564I(3) and (4) are to be calculated in that other currency.
3
The amount of each payment of alternative finance return is to be translated into sterling at a spot rate of exchange for the day on which the payment is made.
564KF5Diminishing shared ownership arrangements
1
In the case of diminishing shared ownership arrangements, payments by the eventual owner under the arrangements are alternative finance return for the purposes of this Part, except so far as subsection (2) or (3) applies to them.
2
3
This subsection applies to the payments so far as they amount to payments in respect of any arrangement fee or legal or other expenses which the eventual owner is required under the arrangements to pay.
4
In this section “the eventual owner” has the same meaning as in section 564D.
564LF6Other arrangements
1
In the case of deposit arrangements, amounts paid or credited as mentioned in section 564E(1)(c) by a financial institution under the arrangements (payments to depositor out of profits resulting from use of money) are alternative finance return for the purposes of this Part.
2
In the case of profit share agency arrangements, amounts paid or credited by a financial institution in accordance with such an entitlement as is mentioned in section 564F(1)(d) (principal's entitlement to profits under the arrangements) are alternative finance return for the purposes of this Part.
3
In the case of investment bond arrangements, the additional payments under the arrangements are alternative finance return for the purposes of this Part, but subject to subsection (4).
4
If any part of the additional payments in respect of investment bond arrangements equates in substance to discount, that part is not treated as alternative finance return for income tax purposes.
5
In this section “additional payments” has the same meaning as in section 564G (see subsection (1)(d)(iii) of that section).
6
For the treatment of the part of the additional payments to which subsection (4) applies, see section 564R (treatment of discount).
Pt. 10A inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 2 para. 2 (with Sch. 9 paras. 1-9, 22)