Corporation Tax Act 2009 section 377

Party to loan relationship having major interest in other party

Section 377 sets out the third condition under which the connected parties rules for loan relationships apply: where either the debtor or the creditor holds a major interest in the other party.

• This section provides one of the conditions that triggers the connected parties rules under section 373 for loan relationships.
• The condition is met where either the debtor company or the creditor company has a major interest in the other party to the loan.
• The term "major interest" is specifically defined elsewhere in the legislation, in section 473 of the Corporation Tax Act 2009.
• This provision ensures that loan relationships between parties where one holds a major interest in the other are subject to the special connected parties rules, which may restrict the tax treatment available.