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Corporation Tax Act 2010

Section 766: Deemed loan relationship

2326.This section brings the loan relationship provisions into play if there is a type 2 finance arrangement. It is based on section 774D(7), (8), (12) and (13) of ICTA.

2327.Subsection (2) has the effect of deeming a loan relationship to exist for the purposes of Part 5 of CTA 2009. The wording of subsection (2) chimes with the definition of “loan relationship” in section 302(1) of CTA 2009 to define a loan relationship. See also Chapter 9 of Part 5 of CTA 2009 (loan relationships: partnerships involving companies).

2328.Under subsection (3), any finance charge recorded in respect of the advance in the partnership’s accounts is deemed to be interest payable under the deemed loan relationship.

2329.If subsection (3) deems there to be interest payable, subsection (5) determines when it is deemed to be paid.

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