Taxation (International and Other Provisions) Act 2010 section 471

Loans made by relevant public bodies

Section 471 provides that certain loans made by relevant public bodies are treated as if they were not made by a related party, where making a profit from the loan is merely incidental.

• Where a relevant public body lends money to a person and is a related party of that person, special treatment may apply
• The key condition is that realising a profit must be merely incidental to making the loan — in other words, the loan is not primarily a commercial, profit-driven arrangement
• When the conditions are met, both the public body and the borrower are treated as if they were not related parties for the purposes of the corporate interest restriction rules
• This treatment applies to the loan itself and to anything done under or for the purposes of the loan