Part 8Other reliefs
Chapter 1Interest payments
Loans for investing in partnerships
400Film partnerships
1
This section applies in a tax year if—
a
the partnership (“the film partnership”) carries on a trade,
b
the profits or losses of the trade are calculated in accordance with Chapter 9 of Part 2 of ITTOIA 2005 (films etc),
c
the loan is secured on an asset or activity of another partnership (“the investment partnership”),
d
the individual to whom the loan is made (“A”) is or has been a member of the investment partnership, and
e
at any time in the year the proportion of the profits of the investment partnership to which A is entitled is less than the proportion of that partnership's capital contributed by A at that time.
2
For the purposes of subsection (1)(c), a loan is secured on an asset or activity of a partnership if there is an arrangement—
a
under which such an asset may be used or relied upon wholly or partly to guarantee repayment of any part of the loan, or
b
because of which any part of the loan is expected to be repaid directly or indirectly out of assets held by or income accruing to the partnership.
3
In subsection (1)(e)—
“profits” excludes any amount that would not be taken into account as, or for the purposes of calculating, income for income tax purposes, and
“partnership's capital” means—
- a
anything that is, or in accordance with generally accepted accounting practice would be, accounted for as partners' capital or partners' equity, and
- b
amounts lent to the partnership by partners or persons connected with partners.
- a
4
So far as the investment partnership's capital includes at any time any of the following amounts, they are treated as amounts contributed by A—
a
any amount A paid to acquire any interest in the partnership, so far as A retains the interest at that time,
b
any amount made available by A directly or indirectly to another person, so far as that person retains any interest in the partnership at that time,
c
any amount A lent to the partnership, so far as it has not been repaid at that time,
d
any amount A made available directly or indirectly to another person, so far as any amount that person lent to the partnership has not been repaid at that time, and
e
an amount made available in any other way prescribed by regulations made by the Commissioners for Her Majesty's Revenue and Customs.
5
Regulations under subsection (4)(e)—
a
may make provision having retrospective effect,
b
may make provision generally or only in relation to specified cases or circumstances,
c
may make different provision for different cases or circumstances,
d
may make transitional, consequential or incidental provision, and
e
may be made only if a draft of them has been laid before and approved by a resolution of the House of Commons.
6
In this section a reference to A includes a reference to a person connected with A.
7
Section 993 (meaning of “connected” persons) applies for the purposes of this section with the omission of subsections (3) to (7).