Corporation Tax Act 2010 section 759

Certain tax consequences not to have effect

Section 759 prevents certain favourable tax consequences from arising where a type 1 finance arrangement would otherwise produce them for the borrower or connected persons.

• Where a type 1 finance arrangement would result in income escaping a corporation tax charge, that avoidance of tax is blocked and the normal tax consequences apply instead.
• The blocked effects include income not being charged to corporation tax, income not being brought into account for corporation tax purposes, or the borrower gaining an income deduction (either against income or total profits).
• Where the borrower is a partnership, the same blocking rules apply but are directed at the individual members of the partnership rather than the borrower itself.
• For the purposes of this section, the borrower and lender are treated as not being connected with one another, so the connected persons rules apply only to other relationships.