Section 769 — Corporation Tax Act 2010: Deemed loan relationship

Deemed loan relationship 769 1 This section applies if—

a there is a type 3 finance arrangement, and b a relevant member is a company within the charge to corporation tax.

2 In relation to the company—

a the advance is treated for the purposes of Chapter 9 of Part 5 of CTA 2009 (and the other provisions of that Part (loan relationships)) as a money debt owed by the partnership, and b the arrangement is treated as a transaction for the lending of money from which the debt is treated as arising for those purposes.

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

4 The reference in subsection (3) to the partnership's accounts includes a reference to the accounts of any relevant member.

5 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 767(2)(d) 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.

6 A relevant member is a person who—

a was a member of the partnership immediately before the relevant change in relation to it occurred, and b is not the lender.