Finance Act, 1994
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Amendment of section 84A (limitation on meaning of “distribution”) of Corporation Tax Act, 1976. |
50.—(1) Section 84A (as amended by section 45 of the Finance Act, 1993 ) of the Corporation Tax Act, 1976 , is hereby amended— | |
(a) in subsection (3A)— | ||
(i) by the substitution in paragraph (b)— | ||
(I) for “in the period from the 31st day of January, 1990, to the 31st day of December, 1991” of “on or after the 31st day of January, 1990”, and | ||
(II) for “as is paid in respect of relevant principal specified in the list” of “as is paid for a specified period in respect of relevant principal advanced and which was, at the time the relevant principal was advanced, specified in the list”, | ||
(ii) by the addition, after subparagraph (ii) of paragraph (c), of the following subparagraph: | ||
“(iii) where, at any time after an amount of relevant principal is specified in a list in accordance with subparagraph (iv) of paragraph (b) of subsection (3A) or subparagraph (ii) of paragraph (b) of subsection (3B), a company advances, or is treated as advancing, to a borrower relevant principal the interest in respect of which is treated, by virtue only of paragraph (b) of subsection (3A) or paragraph (b) of subsection (3B), as a distribution, the amount of relevant principal specified in the list shall be treated as reduced by the amount of relevant principal so advanced, or treated as advanced, and the amount so reduced shall be treated as the amount specified in the said list.”, | ||
(iii) by the addition, after paragraph (d), of the following paragraph: | ||
“(e) In this subsection and in subsection (3B), ‘specified period’, in relation to relevant principal, means the period commencing on the date on which the relevant principal was advanced and ending on the date on which the relevant principal falls to be repaid under the terms of the agreement to advance the said relevant principal or, if earlier— | ||
(i) in the case of relevant principal advanced before the 11th day of April, 1994, the 11th day of April, 2001, and | ||
(ii) in any other case, a date which is 7 years after the date on which the said relevant principal was advanced.”, | ||
and | ||
(b) in subsection (3B), by the substitution in paragraph (b) for “as is paid in respect of relevant principal specified in the list” of “as is paid for a specified period in respect of relevant principal advanced and which was, at the time the relevant principal was advanced, specified in the list”. | ||
(2) (a) Where, at any time before the 7th day of December, 1993— | ||
(i) relevant principal (hereafter referred to as the “first-mentioned relevant principal”), the interest in respect of which was treated, by virtue only of subsection (3A) (b) or (3B) (b) of section 84A of the Corporation Tax Act, 1976 , as a distribution, advanced by a company to a borrower was repaid by the borrower before the scheduled repayment date, and | ||
(ii) a further amount, or further amounts, of relevant principal, the interest in respect of which falls to be treated, by virtue only of the said subsection (3A) (b) or (3B) (b), as a distribution, was or were advanced to that borrower, | ||
subparagraph (iii) (inserted by this section) of subsection (3A) (c) of section 84A of the Corporation Tax Act, 1976 , shall not apply in relation to so much of— | ||
(I) the further amount of relevant principal advanced as does not exceed the amount of relevant principal repaid, or | ||
(II) where there are more further amounts advanced than one, the aggregate of the further amounts of relevant principal advanced as does not exceed the relevant principal repaid. | ||
(b) Where, by virtue of paragraph (a), the said subparagraph (iii) does not apply in relation to any amount of relevant principal advanced by a company, the company shall be treated as having— | ||
(i) received a repayment of that amount of relevant principal, and | ||
(ii) advanced a corresponding amount of relevant principal, | ||
on the scheduled repayment date of the first-mentioned relevant principal. | ||
(c) For the purposes of this subsection, where there are more further advances of relevant principal than one, the amount to which subparagraph (iii) of subsection (3A) (c) of section 84A of the Corporation Tax Act, 1976 , does not apply shall be referable as far as possible to an earlier rather than a later such further advance | ||
(d) In this subsection “scheduled repayment date”, in relation to any relevant principal, means the date on which the relevant principal falls to be repaid under the terms of the agreement to advance the said relevant principal. | ||
(3) This section shall— | ||
(a) apply for the purposes of determining whether interest paid in respect of relevant principal advanced, or treated as advanced, on or after the 7th day of December, 1993, is to be treated as a distribution, | ||
(b) take account of relevant principal advanced before the 7th day of December, 1993, and | ||
(c) be construed together with sections 84 and 84A of the Corporation Tax Act, 1976 : | ||
Provided that interest which, but for this proviso, would not be treated as a distribution by virtue only of— | ||
(i) subparagraph (iii) (inserted by this section) of subsection (3A) (c) of section 84A of the Corporation Tax Act, 1976 , may be treated as a distribution if it is paid in respect of relevant principal advanced before the 7th day of December, 1993, and | ||
(ii) paragraph (e) (inserted by this section) of subsection (3A) of the said section 84A may be treated as a distribution if it is paid before the 11th day of April, 1994. |