Finance Act, 1983

Interest in respect of certain securities.

48.—(1) Subject to subsection (2), this section applies to any interest which is a distribution and which is paid by a company in respect of a security of the company falling within subparagraph (ii), (iii) (I) or (v) of section 84 (2) (d) of the Corporation Tax Act, 1976 , where—

(a) the security in respect of which the interest is paid was issued by the company to another company the ordinary trading activities of which include the lending of money, and

(b) either—

(i) the obligation to pay the interest was entered into before the 9th day of February, 1983, or

(ii) that obligation was entered into before the 9th day of June, 1983, pursuant to negotiations which were in progress on the 9th day of February, 1983:

Provided that an obligation shall be treated for the purposes of paragraph (b) as having been entered into before a particular date if, but only if, before that date, there was in existence a binding contract in writing under which that obligation arose and, where that contract was subject to the execution of a loan agreement, that the loan agreement was duly executed before the 9th day of June, 1983.

(2) (a) Where the period of repayment (hereafter in this subsection referred to as “the repayment period”) of either principal or interest provided for under such an obligation as is referred to in subsection (1) (b) is extended on or after the 9th day of February, 1983 (whether or not the right to such an extension arose out of the terms of the contract creating that obligation), then, subject to paragraph (b), this section shall not apply to any interest which is paid in respect of the period by which the repayment period is extended.

(b) Where the repayment period is extended before the 9th day of June, 1983, pursuant to negotiations which were in progress on the 9th day of February, 1983, paragraph (a) shall not apply to any interest which is paid in respect of the shorter of the following periods, that is to say—

(i) the period by which the repayment period is extended, and

(ii) the first five years of the period mentioned in subparagraph (i).

(3) Interest to which this section applies shall not be treated as a distribution for the purposes of either section 38 or 41 .

(4) The tax credit in respect of any interest to which this section applies shall not be available, under any provision of the Corporation Tax Acts, for payment to the person by whom the interest is received.