Corporation Tax Act 2009 section 507

Investment bond arrangements

Section 507 defines the conditions that must be met for arrangements to qualify as "investment bond arrangements", a type of alternative finance arrangement that shares characteristics with a conventional bond.

• An investment bond arrangement involves a bond-holder paying capital to a bond-issuer, who acquires specified assets to generate income, with obligations to repay the capital and make additional payments that do not exceed a reasonable commercial return on a loan of the same amount
• The arrangements must have a fixed term, at the end of which remaining assets are sold, and the bond-holder's rights must be transferable to another person
• The arrangements must be listed on a recognised stock exchange or admitted to trading on a multilateral trading facility operated by a regulated recognised stock exchange in the UK, the European Economic Area, or Gibraltar, and must be treated (or would be treated) as a financial liability under international accounting standards
• Flexible features are permitted: additional payments may be fixed or variable, the redemption payment may be reduced if asset values or income fall, the bond-holder may have early termination rights, and redemption may be satisfied by the issue or transfer of shares or other securities