Section 100B | Section 100A(1): exceptions ^F1

(1)Section 100A(1) does not apply if subsection (2), (3) or (4) applies.

(2)This subsection applies if—

(a)the company's interest in the property was acquired directly or indirectly from a connected company at an undervalue, or

(b)the company's interest in the property derives from an interest that was so acquired.

(3)This subsection applies if, at any time after the relevant time—

(a)expenditure in respect of the property has been incurred directly or indirectly by a connected company, or

(b)any borrowing of the company directly or indirectly from a connected company has been outstanding (but see subsection (7)).

(4)This subsection applies if the living accommodation is provided in pursuance of an arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax or national insurance contributions.

(5)In subsection (2) references to the acquisition of an interest include the grant of an interest.

(6)For the purposes of that subsection, an interest is acquired at an undervalue if the total consideration for it is less than that which might reasonably have been expected to be obtained on a disposal of the interest on the open market; and “consideration” here means consideration provided at any time (and, for example, includes payments by way of rent).

(7)For the purposes of subsection (3)(b), no account is to be taken of—

(a)any borrowing at a commercial rate, or

(b)any borrowing which results in D being treated under Chapter 7 (taxable benefits: loans) as receiving earnings.

(8)In subsection (4) “arrangement” includes any scheme, agreement or understanding, whether or not enforceable.

(9)In this section “connected company” means—

(a)a company connected with D, with a member of D's family or with an employer of D, or

(b)a company connected with such a company.