SolvedCITM4340 | Alternative finance arrangements (AFAs): Modifying the CITR rules to accommodate AFAs - FA05/s47 arrangements
From HM Revenue & Customs · Community investment tax relief manual
Where an arrangement falls within FA05/s47, the following table shows how the CITR rules are modified to equate aspects of conventional loans with those of FA05/s47 arrangements.
| Conventional Loan | FA05/s47 arrangement |
|---|---|
| Amount of loan | Purchase price of the asset transferred between the parties |
| Loan being drawn down over a period of time | Transfer of an asset in instalments |
| Date a loan is first drawn down | Date of the first instalment payment for an asset |
| Amount drawn down | Value of instalment payments transferred |
| Repayment of loan capital (for the purposes of calculating the amount of capital outstanding on the “loan”) | Each payment of the sale price (less any amount of alternative finance return included in the payment) |
| Beneficial owner of the loan | Person beneficially entitled to payment of the sale price |
| Disposal of all or part of a loan | Disposal of the right to receive all or part of the sale price |
The CITR rules are also modified such that the transfer of an asset between a community development finance institution and one of its investors under a FA05/s47 arrangement that is treated as a qualifying investment is not caught a receipt of value (CITM7110).