Finance Act, 1992

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Chapter III

Corporation Tax

Amendment of section 84A (limitation on meaning of “distribution”) of Corporation Tax Act, 1976.

40.—Section 84A (as amended by the Finance Act, 1991 ) of the Corporation Tax Act, 1976 , is hereby amended—

(a) in paragraph (b) of subsection (3A) (inserted by the Finance Act, 1990 )—

(i) by the substitution of “as is paid in respect of relevant principal specified in the list referred to in sub-paragraph (iv)” for “as is paid in that period”,

(ii) by the substitution in subparagraph (iv) of “before the 25th day of March, 1992, the specified trade of the borrower was included in a list prepared by the Industrial Development Authority and approved before that day” for “the specified trade of the borrower is selected by the Industrial Development Authority for inclusion in a list, approved”,

(b) as respects relevant principal advanced by a company on or after the 20th day of December, 1991, by the substitution of the following subsection for subsection (3B):

“(3B) (a) Notwithstanding subsections (2), (3) and (3A), any interest paid to a company in respect of relevant principal advanced by the company on or after the 20th day of December, 1991, shall not be treated as a distribution for the purposes of this Act in the hands of the company.

(b) Where, apart from this paragraph, any interest paid to a company in respect of relevant principal advanced by the company on or after the 20th day of December, 1991, would not be treated as a distribution for the purposes of this Act in the hands of the company by virtue only of the provisions of paragraph (a), then the provisions of that paragraph shall not apply in relation to so much of that interest as is paid in respect of relevant principal specified in the listreferred to in subparagraph (ii) of this paragraph if—

(i) the specified trade is a trade which the borrower commenced to carry on after the 31st day of January, 1990, or is a specified trade of the borrower in respect of which he is committed, under a business plan approved by the Industrial Development Authority, the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta, to the creation of additional employment,

(ii) before the 25th day of March, 1992, the specified trade of the borrower was included in a list prepared by the Industrial Development Authority and approved before that day by the Minister for Industry and Commerce and the Minister for Finance, which list specifies a particular amount of relevant principal in respect of each trade which amount is considered to be essential for the success of that trade, and

(iii) the borrower, or a company connected (within the meaning of section 157 (5)) with the borrower, is not a company which commenced to carry on relevant trading operations (within the meaning of section 39B of the Finance Act, 1980 ) after the 20th day of April, 1990, or intends to commence to carry on such trading operations:

Provided that this paragraph shall not apply to any interest in respect of any relevant principal advanced after the time the total of the amounts of relevant principal to which this paragraph applies, advanced by all lenders who have made such advances, exceeds the aggregate of—

(a) £250,000,000, and

(b) the excess, if any, of the amount specified in the proviso to paragraph (b) of subsection (3A) over the total of the amounts of relevant principal to which that paragraph applies advanced by all lenders who have made such advances.”,

and

(c) in paragraph (b) of subsection (4A)—

(i) by the insertion after subparagraph (i) of the following proviso:

“Provided that this subparagraph shall not apply as respects any relevant period commencing on or after the 20th day of December, 1991, if in that relevant period the said rate exceeds the rate on the basis of which interest would have fallen to be computed if the relevant principal had continued to be denominated in the currency in which it was denominated on the 30th day of January, 1991,”,

(ii) in subparagraph (ii), with effect on and from the 30th day of January, 1991—

(I) by the deletion of “for the purposes of a specified trade”, and

(II) by the insertion in clause (II) of “for the purposes of a specified trade” before “of a borrower”,

and

(iii) by the insertion after subparagraph (ii) of the following proviso:

“Provided that this subparagraph shall not apply as respects any relevant period commencing on or after the 20th day of December, 1991—

(a) to such amount of interest as is paid in respect of a period (which shall be deemed to be a separate relevant period) commencing on the 20th day of December, 1991, and ending on the 31st day of December, 1991, as exceeds an amount determined by reference to the rate referred to in sub-paragraph (A) of paragraph (b) where the relevant principal was advanced on the 20th day of December, 1991, under an agreement entered into before that day, and

(b) in the case of any other interest, if in the relevant period or, where paragraph (a) applies, the part of the relevant period other than the period referred to in that paragraph, the rate on the basis of which interest in respect of the relevant security falls to be computed exceeds—

(A) a rate approved by the Minister for Finance in consultation with the Minister for Industry and Commerce,

or

(B) where it is lower than the rate so approved and the relevant principal was advanced on or after the 30th day of January, 1991, and before the 20th day of December, 1991, the rate which would have applied if the relevant principal had continued to be denominated in the currency in which it was denominated when it was advanced,”.