Income Tax Act 2007 section 809BZH

Certain tax consequences not to have effect

Section 809BZH prevents certain tax benefits from arising where a type 2 finance arrangement involves a relevant change in relation to a partnership.

• Where a type 2 finance arrangement exists and a relevant change in the partnership would otherwise produce a tax advantage, the partnership tax rules apply as if that change had never occurred
• The "relevant effect" being blocked covers three scenarios: income escaping a tax charge, income not being brought into account for tax purposes, or the transferor (or connected person) gaining an income deduction
• When testing whether the relevant effect would arise, it must be assumed that income equal to the payments referred to in section 809BZF(2)(e) were payable to the partnership before the relevant change took place
• An income deduction means either a deduction in calculating income for income tax purposes or a deduction from total income