Corporation Tax Act 2009 section 504

Diminishing shared ownership arrangements: initial acquisition

Section 504 defines the conditions under which a co-ownership arrangement between a financier and a customer qualifies as a diminishing shared ownership alternative finance arrangement for corporation tax purposes.

• A financier (being a financial institution, a regulated home purchase plan provider, or acting through a regulated peer-to-peer lending platform) and a customer each acquire a beneficial interest in the same asset, with the customer gradually buying out the financier's share through staged payments
• The customer has exclusive use of the asset and is entitled to all income, profit or gain from it, including any increase in value, while also making separate payments (such as rent under a lease) to the financier
• The customer may grant interests or rights in the asset to third parties, provided the grant is not to the financier or a connected person, and is not required by the financier or related arrangements
• The financier may bear responsibility for, or share in losses from, any reduction in the asset's value, and the arrangements are excluded from this treatment if the terms are not at arm's length