Corporation Tax Act 2010 section 1021

Section 1020: exceptions

Section 1021 sets out two circumstances in which the rule in section 1020 (which treats certain interest and other payments as distributions) does not apply, thereby allowing those payments to remain outside the distribution rules.

• Where a company pays interest or other returns on securities, section 1020 normally treats those payments as distributions if they exceed a normal commercial return or if the securities carry certain equity-like features.
• Section 1021 provides two specific exceptions to that rule, meaning that in those circumstances the payments are not reclassified as distributions.
• If section 1021 disapplies section 1020 for a particular payment, that payment also cannot be treated as a distribution under paragraph B in section 1000 — this link is established by section 1002(2).
• Further interpretation rules in subsections (2) to (5) clarify how the two exceptions operate in practice.

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