Income Tax Act 2007 section 360

Disposal of loan during 5 year period

Section 360 deals with the consequences for community investment tax relief (CITR) when an investor disposes of a loan investment during the five-year period, and sets out the circumstances in which a disposal is permitted without triggering withdrawal of relief.

• If an investor disposes of the whole of a loan investment (other than by a permitted disposal) or any part of it within the five-year period, all CITR attributable to that investment for any tax year must be withdrawn
• A disposal is permitted if it arises from the dissolution or winding up of the CDFI, or from the complete loss, destruction, dissipation or extinction of the asset under section 24(1) of TCGA 1992, or from a negligible value claim under section 24(2) of that Act, or if it occurs after the CDFI has lost its accreditation
• Where a disposal qualifies as permitted, previously obtained tax reductions are not withdrawn, but no further tax reductions may be claimed for subsequent years
• A full or partial repayment of the loan by the CDFI is not treated as a disposal and therefore does not trigger any withdrawal of relief