Taxation (International and Other Provisions) Act 2010 section 191

When sections 192 to 194 apply

Section 191 sets out the conditions that must be met before sections 192 to 194 can apply, which deal with the position of a guarantor company where interest on a loan or security has been reduced under transfer pricing rules because of the existence of that guarantee.

• The rules apply where a company (the issuing company) has borrowed money by issuing a security, and another company (the guarantor company) has guaranteed the liabilities under that security
• The interest or other amounts payable under the security must have been reduced (possibly to nil) under the transfer pricing rules in section 147, specifically because of the guarantee provisions in section 153
• The term "security" is given a broad meaning and includes unsecured borrowings — any interest on money advanced without a formal security, or other consideration for the use of such money, is treated as if a security had been issued
• The term "guarantee" is also widely defined and covers not only formal guarantees and sureties but also any informal arrangement, relationship or understanding where the lender has a reasonable expectation of being paid by another company if the issuing company defaults