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HMRC internal manual

Corporate Finance Manual

From
HM Revenue & Customs
Updated
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Deemed loan relationships: alternative finance: other tax rules: capital allowances and capital gains

The consideration for an asset

Where an asset is bought and sold under a purchase and resale arrangement the difference between the sale and purchase price of the asset is brought into account as the effective return under the loan relationships legislation.

Where an asset is bought and sold under a diminishing shared ownership arrangement the difference between the price paid for the financial institution’s beneficial interest and the total amount of payments paid to the financial institution is brought into account as the alternative finance return under the loan relationships legislation.

CTA09/S514 applies to exclude the effective return (for a purchase and resale arrangement) or alternative finance return (for a diminishing shared ownership arrangements) from the consideration for the sale and purchase of an asset for all other purposes of the Taxes Act and for TCGA92. The only circumstances where CTA09/S514 does not apply is if any provision of the Taxes Acts or TCGA92 provide for the consideration on the sale or purchase of the asset to be an amount other than the actual consideration. For instance, the capital gains rules may impose market value for a transaction between connected persons.