Alternative finance arrangements (AFAs): Modifying the CITR rules to accommodate AFAs - FA05/s47 arrangements
Where an arrangement falls within FA05/s47, the following table shows how the CITR rules are modified to equate aspects of conventional loans with those of FA05/s47 arrangements.
|Conventional Loan||FA05/s47 arrangement|
|Amount of loan||Purchase price of the asset transferred between the parties|
|Loan being drawn down over a period of time||Transfer of an asset in instalments|
|Date a loan is first drawn down||Date of the first instalment payment for an asset|
|Amount drawn down||Value of instalment payments transferred|
|Repayment of loan capital|
|(for the purposes of calculating the amount of capital outstanding on the “loan”)||Each payment of the sale price (less any amount of alternative finance return included in the payment)|
|Beneficial owner of the loan||Person beneficially entitled to payment of the sale price|
|Disposal of all or part of a loan||Disposal of the right to receive all or part of the sale price|
The CITR rules are also modified such that the transfer of an asset between a community development finance institution and one of its investors under a FA05/s47 arrangement that is treated as a qualifying investment is not caught a receipt of value (CITM7110).