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“Restriction of relief for payments of interest.
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817A.— (1) Relief shall not be given to any person under Part 8 in respect of any payment of interest, including interest treated as a charge on income, if a scheme has been effected or arrangements have been made such that the sole or main benefit that might be expected to accrue to that person from the transaction under which the interest is paid is the obtaining of a reduction in tax liability by means of any such relief.
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(2) Where relief in respect of interest paid, being interest treated as a charge on income, is claimed by virtue of section 420(6), any question under this section as to what benefit might be expected to accrue from the transaction under which that interest is paid shall be determined by reference to the claimant company (within the meaning of section 411(2)) and the surrendering company (within the meaning of that section) taken together.
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Treatment of interest in certain circumstances.
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817B.—(1) (a) In this section—
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‘chargeable period’ means an accounting period of a company or a year of assessment, and a reference to a chargeable period or its basis period is a reference to the chargeable period if it is an accounting period and to the basis period for it if it is a year of assessment;
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‘basis period’ means the period on the profits or gains of which income tax is to be finally computed under Schedule D or, where by virtue of the Income Tax Acts the profits or gains of any other period are to be taken to be the profits or gains of that period, that other period.
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(b) For the purposes of this section, in relation to interest which is to be taken into account in computing income chargeable to tax under Case I of Schedule D—
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(i) where 2 basis periods overlap, the period common to both shall be deemed to fall in the first basis period only,
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(ii) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, the interval shall be deemed to be part of the first basis period, and
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(iii) the reference in subparagraph (i) to the overlapping of 2 periods shall be construed as including a reference to the coincidence of 2 periods or to the inclusion of one period in another, and the reference to the period common to both shall be construed accordingly.
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(2) Notwithstanding any other provision of the Tax Acts, where, in relation to a chargeable period (in this subsection referred to as the ‘earlier chargeable period’), a person receives interest in the chargeable period or its basis period, so much of the amount of the interest as, apart from this section—
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(a) would not be taken into account in computing the person's income chargeable to tax under Schedule D for the earlier chargeable period, and
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(b) would be so taken into account for a subsequent chargeable period or subsequent chargeable periods,
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shall be taken into account in computing the person's income so chargeable for the earlier chargeable period and shall not be so taken into account for the subsequent chargeable period or, as the case may be, the subsequent chargeable periods.”.
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