Section 554F — Income Tax (Earnings and Pensions) Act 2003: Exclusions: commercial transactions

Exclusions: commercial transactions 554F 1 Chapter 2 does not apply by reason of a relevant step which is the payment of a sum of money by way of a loan if—

a the loan is a loan on ordinary commercial terms within the meaning of section 176, ignoring conditions B and C in that section, and b there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.

2 Chapter 2 does not apply by reason of a relevant step taken by a person (“P”), which is not the payment of a sum of money by way of a loan, if—

a the step is taken for the sole purpose of a transaction which P has with A and which P entered into in the ordinary course of P's business, b a substantial proportion of P's business involves similar transactions with members of the public, c the terms on which P entered into the transaction with A are substantially the same as the terms on which P normally enters into similar transactions with members of the public, and d there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.

3 For the purposes of subsection (2)(b) and (c) a transaction is “similar” if it is of the same or a similar type to the transaction which P has with A.

4 In subsection (2)(b) and (c) “ members of the public ” means members of the public at large with whom P deals at arm's length.

5 In this section references to A include references to any person linked with A.

6 See paragraph 25 of Schedule 11 to F( No. 2)A 2017 for provision about exclusions where a loan is made on ordinary commercial terms and the relevant step is within paragraph 1 of that Schedule.