Part 8

Other reliefs
Chapter 1

Interest payments

Loans for investing in partnerships

Film partnerships
400
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—
  1. anything that is, or in accordance with generally accepted accounting practice would be, accounted for as partners' capital or partners' equity, and
  2. amounts lent to the partnership by partners or persons connected with partners.
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).