Taxation (International and Other Provisions) Act 2010 section 415

Section 414: interpretation

Section 415 provides interpretation rules for section 414, which determines qualifying net group interest expense. It clarifies when a person is not treated as a related party, defines results-dependent securities, excludes alternative finance returns, and defines relevant equity notes.

• A person who would only be a related party because of financial assistance (such as a guarantee) can be treated as not being a related party if certain conditions are met — for example, if the assistance was provided before 1 April 2017, was provided by a group member, relates only to shares in the ultimate parent or loans to a group member, or is a non-financial guarantee
• Results-dependent securities are securities where the consideration paid for the use of the principal depends to any extent on the results of the issuing entity's business or the business of another group member, but a security is not results-dependent merely because its terms reduce the consideration when results improve or increase it when results deteriorate
• Amounts that constitute relevant alternative finance return (as defined in section 1019(2) of CTA 2010) are excluded from the results-dependent securities category
• A relevant equity note is a security that qualifies as an equity note under section 1016 of CTA 2010 and would still satisfy that test even if the permitted period were extended to 100 years from the date of issue

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