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Amendment of section 452 (application of section 130 to certain interest) of Principal Act.
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50.— (1) Section 452 of the Principal Act is amended—
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(a) by inserting the following after subsection (3):
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“(3A) (a) This paragraph shall apply to so much of any yearly interest as—
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(i) is a distribution by virtue only of section 130(2)(d)(iv),
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(ii) is payable by a company in the ordinary course of a trade carried on by that company and would, but for section 130(2)(d)(iv), be deductible as a trading expense in computing the amount of the company’s income from the trade, and
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(iii) is not interest to which subsection (2)(a) applies.
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(b) Where a company proves that paragraph (a) applies to any interest payable by it for an accounting period and elects to have that interest treated as not being a distribution for the purposes of section 130(2)(d)(iv), then section 130(2)(d)(iv) shall not apply to that interest.”,
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and
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(b) in subsection (4), by substituting “subsection (2)(b), (3)(b) or (3A)(b)” for “subsection (2)(b) or (3)(b)”.
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(2) This section applies as respects interest paid on or after 1 February 2007.
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