Part 6Relationships treated as loan relationships etc
F1Chapter 6AShares accounted for as liabilities
521EUnallowable purpose
1
For the purposes of section 521C, the investing company holds the share for an unallowable purpose if the main purpose, or one of the main purposes for which the company holds the share is to obtain a relevant tax advantage.
2
But the investing company may elect that this Chapter is to apply in relation to the share even though it would otherwise be prevented from applying by subsection (1)(f) of that section.
3
An election under subsection (2)—
a
must be made no later than the time when the investing company first holds the share or, if later, when the share begins to produce a return for the investing company, and
b
is irrevocable.
4
In this section “ obtain a relevant tax advantage ” means secure that the return produced by the share (or any part of it) is received in a way that means that its treatment for corporation tax purpose is more advantageous to the investing company than it would be if it were—
a
charged to corporation tax as income of the investing company, or
b
brought into account as income of the investing company for corporation tax purposes,
at the time when amounts would be brought into account in relation to the return in accordance with section 521B.
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Pt. 6 Ch. 6A inserted (retrospective and with effect in accordance with Sch. 24 paras. 12, 13-16 of the commencing Act) by Finance Act 2009 (c. 10), Sch. 24 para. 412