Amendment made: 1, in schedule 5, page 75, line 36, at end insert—

“Non-qualifying loans

6A (1) Section 285 of ITA 2007 (interpretation of Chapter 3 etc of Part 6) is amended as follows.

(2) In subsection (2)—

(a) omit “(whether secured or not)”;

(b) at the end of paragraph (b) insert “, or

(c) any liability of the company in respect of a loan to which subsection (2A) applies that has been made to the company.”

(3) After that subsection insert—

“(2A) This subsection applies to a loan if—

(a) the return on the loan represents more than a commercial rate of return, or

(b) the loan is made on terms which grant to a person or allow a person to acquire—

(i) any security or preferential rights in relation to assets of the company, or

(ii) the ability to control the company.

In sub-paragraph (ii) “control” has the meaning given by sections 450 and 451 of CTA 2010.

(2B) The return on a loan is not to be treated as representing more than a commercial rate for the purposes of subsection (2A)(a) if—

(a) the return on the loan during the period of 5 years from the making of the loan does not exceed 50% of the amount lent, and

(b) the total return on the loan does not exceed—

where—

N is the number of years (including any fraction) in the term of the loan;

A is the amount lent or, in a case where some of the loan is repaid during the term of the loan, the average amount outstanding during that term.

(2C) The Treasury may by regulations substitute a different figure for a figure that is at any time specified in subsection (2B)(a) or (b).

(2D) In subsections (2A)(a) and (2B) “return” means interest, fees, charges and other amounts payable in respect of the loan.

(2E) Where it is to any extent not known, before the end of the term of a loan, what amounts will be payable in respect of the loan—

(a) subsections (2A)(a) and (2B) apply, until the relevant matters are ascertained, on the basis of what amounts can reasonably be expected to be payable;

(b) when those matters are ascertained, any necessary adjustments must be made by making or amending assessments or by repayment or discharge of tax (regardless of any limitation on the time within which assessments or amendments may be made).””—

Schedule 5, as amended, agreed to.

Ordered, That further consideration be now adjourned. —(Graham Stuart.)

Adjourned till Thursday 11 January at half-past Eleven o’clock.

FB01 Association of Accounting Technicians

FB02 LEVC

FB03 Institute of Chartered Accountants in England and Wales (clause 10)

FB04 Institute of Chartered Accountants in England and Wales (clauses 11 and 12 and schedules 1 and 2)

FB05 Institute of Chartered Accountants in England and Wales (clause 23 and schedule 7)

FB06 Institute of Chartered Accountants in England and Wales (clause 35 and schedule 10)

FB07 Institute of Chartered Accountants in England and Wales (clause 38)

FB08 Association of Taxation Technicians (clause 14)

FB09 Low Incomes Tax Reform Group (clause 6)

FB10 This person wishes to remain anonymous

FB11 This person wishes to remain anonymous

FB12 Peter Lamberti

FB13 Chartered Institute of Taxation (clauses 7 to 17)

FB14 The Association of Member Nominated Trustees

FB15 Chartered Institute of Taxation (clause 18)

FB16 Chartered Institute of Taxation (clause 38)

FB17 Institute of Chartered Accountants in England and Wales (clause 18 and schedule 6)

FB18 Chartered Institute of Taxation (clauses 19 to 32 and related schedules)

FB19 This person wishes to remain anonymous