Section 761 — Corporation Tax Act 2010: Deemed loan relationship if borrower is a company

Deemed loan relationship if borrower is a company 761 1 This section applies if—

a there is a type 1 finance arrangement, b the borrower is a company, and c either—

i the arrangement is prevented by section 759 from having the relevant effect in relation to the company, or ii section 760 applies to the company.

2 For the purposes of Part 5 of CTA 2009 (loan relationships)—

a the advance is treated in relation to the company as a money debt owed by it, and b the arrangement is treated in relation to the company as a loan relationship of the company (as a debtor relationship).

3 Any amount which in accordance with generally accepted accounting practice is recorded in the company's accounts as a finance charge in respect of the advance is treated as interest payable under the loan relationship.

4 If an amount is treated as interest (“deemed interest”) under subsection (3), to find out when it is paid—

a treat the payments mentioned in section 758(2)(c) as consisting of amounts for repaying the advance and amounts (“the interest elements”) in respect of interest on the advance, b treat the interest elements of the payments as paid when the payments are paid, and c treat the deemed interest as paid at the times when the interest elements are treated as paid.