Corporation Tax Act 2010 section 259

Profit share agency arrangements

Section 259 explains how the group relief rules apply to profit share agency arrangements, where a person (the principal) appoints a financial institution as agent under alternative finance arrangements.

• When a principal appoints a financial institution as agent under qualifying profit share agency arrangements, the principal is treated as making a loan to the agent equal to the money provided under the arrangements.
• Where the principal provides money in instalments, each instalment is treated as a drawdown of the loan, with the first instalment date treated as the first drawdown date and the cumulative instalments representing the total amount drawn down.
• The outstanding capital on the notional loan equals the balance of repayable money still held by the agent, and any repayment of the money provided counts as a repayment of the loan.
• The beneficial owner of the loan is the person entitled to repayment of the money provided, and any disposal of the right to receive repayment is treated as a disposal of the loan itself.