Part 8

Other reliefs
Chapter 1

Interest payments

General and supplementary

Effect of recovery of capital in the case of some loans
406
1
This section applies if the individual to whom a loan is made to which section 392, 396, 398 or 401 applies recovers any amount of capital from the company, partnership or co-operative concerned at any time after the loan is used.
2
The individual is treated for the purposes of this Chapter as having repaid that amount out of the loan at that time, whether or not such a repayment occurred.
3
Accordingly, only part of the interest that, apart from any such repayment, would be payable on the loan for any period after that time and eligible for relief is so eligible.
4
That part is so much of that interest as is attributable to the amount of the loan after the repayment.
5
In the case of a loan to which section 386 applies (loans partly meeting requirements), subsection (3) applies instead of section 386(3) (under which repayments are apportioned between the qualifying and non-qualifying parts of such loans).
6
The cases in which an individual is treated as having recovered an amount of capital for the purposes of this section are set out in section 407(1) to (3).