Section 288 — Income Tax Act 2007: The no guaranteed loan requirement

The no guaranteed loan requirement 288 1 The requirement of this section is that there are no securities relating to a guaranteed loan in the relevant holding.

2 For the purposes of this section, a security relates to a guaranteed loan if (and only if) there are arrangements for the investing company to be or to become entitled to receive anything (whether directly or indirectly) from a third party in the event of the failure by any person to comply with—

a the terms of the loan to which the security relates, or b the terms of the security.

3 For the purposes of subsection (2) it does not matter whether the arrangements apply in all cases of a failure to comply or only in some such cases.

4 For the purposes of this section “ third party ” means any person except—

a the relevant company, and b if the relevant company is a parent company that meets the trading requirement in section 290(1)(b), the subsidiaries of that company.