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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Authorised investment funds (AIFs): taxation of funds: interest distributions - loan relationships

SI2006/964 Regulation 13 - tax treatment of an interest distribution in a fund

For accounting periods commencing from 1 April 2006 interest distributions paid by an authorised investment fund (AIF) are treated as loan relationship debits.

Note that the carrying back of a loan relationship deficit is not allowable (SI2006/964 Regulation 14). Any excess interest distributions may only be carried forward to the next accounting period as a loan relationship deficit and deducted in that succeeding period.

Accounting periods commencing before 1 April 2006

For accounting periods commencing before 1 April 2006, and ending after 31 March 1996, an interest distribution is allowed as a deduction against the AIF’s profits for CT purposes, except that an excess deduction so created may not be carried back, (ICTA88/S468L (7)).