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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Deemed loan relationships: alternative finance: other tax rules: deduction of tax

Alternative finance arrangements and deduction of tax

Once it has been determined that the return under an alternative finance arrangement is to be treated for tax purposes in the same way as interest then ITA07/S564M applies the following relevant legislation to the amount treated as interest.

  • TMA70/S17 and S18 (reporting requirements for interest paid or credited without deduction of tax).
  • ITA07/S851 (payments to be made subject to deduction of tax) applies to alternative finance return and profit share return as it does to interest - see CTM35205 onwards.
  • ICTA88/S468L (interest distributions by collective investment schemes - a reference to money placed at interest includes a reference to money invested under alternative finance arrangements, but now repealed).
  • ITA07/S851 (building society regulations for the deduction of tax).
  • ITA07/S851-S857 (deduction of tax from interest payments on relevant investments).
  • ITA07/S939 and ITTOIA05\S380 (funding bonds), references to interest include references to alternative finance return and profit share return.
  • CTA09/S443 (restriction of relief for payments of interest) applies to alternative finance return and profit share return as is does to interest.
  • CTA09/S494(1)(a) (collective investment schemes) applies to alternative finance return and profit share return as it does for money placed at interest for the purpose of the non-qualifying investment test for company holdings in unit trusts and offshore funds.