Finance Act 2002

When value is receivedU.K.

35(1)For the purposes of this Part the investor receives value from the CDFI at any time when the CDFI—

(a)repays, redeems or repurchases any securities or shares included in the investment;

(b)releases or waives any liability of the investor to the CDFI or discharges, or undertakes to discharge, any liability of the investor to a third person;

(c)makes a loan or advance to the investor which has not been repaid in full before the investment is made;

(d)provides a benefit or facility for—

(i)the investor or any associates of the investor, or

(ii)if the investor is a company, directors or employees of the investor or any of their associates;

(e)disposes of an asset to the investor for no consideration or for a consideration which is or the value of which is less than the market value of the asset;

(f)acquires an asset from the investor for a consideration which is or the value of which is more than the market value of the asset; or

(g)makes a payment to the investor other than a qualifying payment.

[F1(1A)But if the investor is a bank, the investor does not receive value from the CDFI when the CDFI makes a deposit with the investor in the course of its ordinary banking arrangements.]

(2)For the purposes of sub-paragraph (1)(b) the CDFI shall be treated as having released or waived a liability if the liability is not discharged within 12 months of the time when it ought to have been discharged.

(3)For the purposes of sub-paragraph (1)(c) there shall be treated as if it were a loan made by the CDFI to the investor—

(a)the amount of any debt incurred by the investor to the CDFI (other than an ordinary trade debt), and

(b)the amount of any debt due from the investor to a third person which has been assigned to the CDFI.

(4)For the purposes of this paragraph—

(a)references to a debt or liability do not, in relation to a person, include references to any debt or liability which would be discharged by the making by that person of a qualifying payment;

(b)references to a benefit or facility do not include references to any benefit or facility provided in circumstances such that, if a payment had been made of an amount equal to its value, that payment would have been a qualifying payment; and

(c)any reference to a payment or disposal to a person includes a reference to a payment or disposal made to that person indirectly or to his order or for his benefit.

In paragraphs (a) to (c) references to “a person” include references to any person who, at any time in the period of restriction in question, is connected with that person, whether or not he is so connected at the material time.

(5)In this paragraph—

• [F2“bank” has the meaning given by section 840A of the Taxes Act 1988;]

• “qualifying payment” means—

  (a)

  any payment by any person for any goods, services or facilities provided by the investor (in the course of his trade or otherwise) which is reasonable in relation to the market value of those goods, services or facilities;

  (b)

  the payment by any person of any interest which represents no more than a reasonable commercial return on money lent to that person;

  (c)

  the payment by any company of any dividend or other distribution which does not exceed a normal return on any investment in shares in or securities of that company;

  (d)

  any payment for the acquisition of an asset which does not exceed its market value;

  (e)

  the payment by any person, as rent for any property occupied by the person, of an amount not exceeding a reasonable and commercial rent for the property; and

  (f)

  a payment in discharge of an ordinary trade debt; and

• “ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where any credit given—

  (a)

  does not exceed six months, and

  (b)

  is not longer than that normally given to customers of the person carrying on the trade or business.