Section 388 — Income Tax Act 2007: Loan to buy plant or machinery for partnership use

Loan to buy plant or machinery for partnership use 388 1 This section applies to a loan that is used for capital expenditure on the provision of plant or machinery to which subsection (2) applies.

2 This subsection applies to plant or machinery if—

a it is in use for the purposes of a trade, profession or ... property business carried on by a partnership, and b the partnership is entitled to a capital allowance or liable to a balancing charge in respect of it under section 264 of CAA 2001 (partnership using property of a partner) for the period of account in which the interest is paid.

3 A partnership is treated as entitled to a capital allowance or liable to a balancing charge in respect of plant or machinery for a period of account (“the later period”) for the purposes of subsection (2)(b) if—

a it has been so entitled or liable for a previous period of account, and b no disposal value has been brought into account in respect of it in the later period or any earlier period of account.

4 In this section and sections 389 and 390— “ capital expenditure ” has the meaning given in section 4 of CAA 2001, “ period of account ” has the same meaning as in that Act (see section 6(2) to (6) of that Act), and “property business” has the same meaning as in Part 2 of that Act (see section 16 of that Act).