Corporation Tax Act 2009 section 514

Exclusion of alternative finance return from consideration for sale of assets

Section 514 ensures that where assets are sold under alternative finance arrangements, the alternative finance return (the profit element treated as equivalent to interest) is stripped out when working out the sale or purchase price of the asset for other corporation tax purposes.

• When an asset is sold under purchase and resale, diminishing shared ownership, or investment bond arrangements, the alternative finance return must be excluded from the consideration used for corporation tax purposes
• This prevents the finance return element from inflating or distorting the asset's sale or purchase price for other tax calculations such as trading profits or capital gains
• The exclusion does not apply to the specific sections that define how each type of arrangement is treated as a loan relationship (sections 503, 504, 504A, and 507 respectively)
• Other tax provisions that substitute a deemed consideration in place of the actual consideration (for example, market value rules) continue to operate normally and are unaffected by this section