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HMRC internal manual

Community investment tax relief manual

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).