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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Deemed loan relationships: disguised interest: commencement

Disguised interest: commencement

The disguised interest rules brought in by FA2009 will apply as follows:

Arrangements entered into on or after 22 April 2009 (‘new arrangements’)

Any arrangement to which a company became party on or after 22 April 2009 is capable of being within the disguised interest rules.

Arrangements entered into before 22 April 2009 (and repealed provisions applied)

Any arrangement that was:

  • entered into before 22 April 2009, and
  • is still in place on 22 April 2009, and
  • to which any of the repealed provisions (CFM42020) applied before 22 April 2009 is treated as an arrangement to which the company became party on 22 April 2009.

This means that the arrangement is treated as a new arrangement, with the result that it can then be tested against the requirements of Chapter 2A such that returns arising on or after 22 April may then be brought into account under Chapter 2A.

But this rule does not apply in certain circumstances where the arrangements were previously within FA96/S91D. CFM45520 has further detail.

Arrangements entered into before 22 April 2009 (and repealed provisions did not apply)

Any arrangement that was:

  • entered into before 22 April 2009, and
  • is still in place on 22 April 2009,
  • to which none of the repealed provisions applied

will not be treated, for the purpose of the disguised interest rules in Chapter 2A, as having been entered into on 22 April 2009. In other words such arrangements cannot come within the scope of Chapter 2A (although any later modification to the terms of such arrangements might amount to a new arrangement to which Chapter 2A may apply).