Income Tax Act 2007 section 393A

Close investment-holding companies

Section 393A defines what a "close investment-holding company" is for the purposes of claiming tax relief on interest payments on loans used to invest in close companies.

• A close company is a close investment-holding company in an accounting period unless it exists wholly or mainly for permitted purposes such as carrying on a commercial trade, letting land commercially, or holding shares in qualifying subsidiaries
• Letting of land is treated as commercial unless the tenant is a person connected with the company or a relative or spouse/civil partner of such a person
• A qualifying company is one controlled by the candidate company (or its parent) that itself exists wholly or mainly to carry on a commercial trade or to let land commercially
• If a company enters winding up and was not a close investment-holding company in the accounting period immediately before the winding up began, it will not be treated as one in the subsequent accounting period during the winding up