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110.—(1) In this section—
‘initial period’ in relation to any one originator or original lender means the 3 month period commencing on the day on which any qualifying assets were first acquired from that originator or original lender, as the case may be;
‘original lender’ means any government, public or local authority, company or other body corporate;
‘originator’ means an original lender who is not resident in the State;
‘qualified company’ has the same meaning as in section 446;
‘qualifying asset’ in relation to a company means—
(a) in a case where the company is a qualified company, an asset of an originator which the qualified company acquired directly or indirectly from the originator other than an asset which was created, acquired or held by or in connection with a branch or agency through which the originator carries on a trade in the State, and
(b) in any other case, an asset of an original lender which the company acquired directly or indirectly from the original lender,
where the asset—
(i) in a case where paragraph (a) applies, consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receivable or other debt or receivable whether secured or unsecured,
(ii) and in the case of a company to which paragraph (b) applies, consists of, or of an interest in any financial asset (within the meaning of section 496);
‘qualifying company’ means a company—
(a) which is resident in the State,
(b) which carries on in the State a business of management of qualifying assets,
(c) which, apart from activities ancillary to that business, carries on no other activities in the State, and
(d) in relation to which the market value throughout the initial period of all qualifying assets acquired from any one originator or original lender, as the case may be, is not less than £10,000,000,
but a company shall not be a qualifying company if any transaction is carried out by it otherwise than by way of a bargain made at arm's length.
(2) For the purposes of the Tax Acts in relation to activities carried out in the course of a business carried on by—
(a) a qualifying company which is a qualified company—
(i) such activities shall be deemed to be activities carried out in the course of a trade, the profits or gains of which are chargeable to tax under Case I of Schedule D,
(ii) there shall be deducted as an expense of the trade the amount in so far as it is not—
(I) otherwise deductible, or
(II) recoverable from the originator, or under any insurance, contract of indemnity or otherwise howsoever,
of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad, and
(iii) where at any time an amount or part of an amount which has been deducted as an expense under subparagraph (ii) is recovered or is no longer estimated to be bad, the amount which has been so deducted shall, in so far as it is recovered or is no longer estimated to be bad, be treated as trading income of the trade at that time, and
(b) any other qualifying company—
(i) profits arising from such activities shall, notwithstanding any other provisions of the Tax Acts, be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule, and for that purpose shall be computed in accordance with the provisions applicable to Case I of that Schedule,
(ii) there shall be deducted, in computing the amount of the profits to be charged to tax the amount, in so far as it is not—
(I) otherwise deductible, or
(II) recoverable from the original lender or under any insurance, contract of indemnity or otherwise howsoever,
of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad; but the amount of the debt shall not be deducted under this paragraph unless it would have been deductible as an expense of the trade of the original lender, where the original lender is a company or other body corporate, if that debt had been proved or estimated to be bad before it was acquired by the qualifying company, and
(iii) where at any time an amount or part of an amount which has been deducted as an expense under subparagraph (ii) is recovered or is no longer estimated to be bad, the amount which has been deducted shall, in so far as it is recovered or no longer estimated to be bad, be treated as income of the qualifying company at that time.”.
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