Section 196B | Employer asset-backed contributions: denial of relief (1)

(1)An employer (“E”) is not to be given relief in respect of a contribution (“E's contribution”) paid by E under a registered pension scheme if conditions A, B and C are met.

(2)Condition A is that—

(a)under an arrangement (“the asset-backed arrangement”)—

(i)a person (“the borrower”) receives money or another asset (“the advance”) from another person (“the lender”),

(ii)the borrower, or a person connected with the borrower, makes a disposal of an asset (“the security”) to or for the benefit of the lender or a person connected with the lender, and

(iii)the lender, or a person connected with the lender, is entitled to payments in respect of the security,

(b)the borrower is E or a person connected with E, and

(c)the advance is (wholly or partly) paid or provided by the lender out of E's contribution (directly or indirectly),

and the case is not one in relation to which either condition A in section 196D or condition A in section 196F is met.

(3)For the purposes of subsection (2)(a)(iii) it does not matter if an entitlement of the lender, or a person connected with the lender, is subject to any condition.

(4)Condition B is that the asset-backed arrangement is not an acceptable structured finance arrangement (see section 196C).

(5)Condition C is that it is reasonable to suppose that the amount of one or more of the payments mentioned in subsection (2)(a)(iii) has been, or is to be, determined (wholly or partly) on the basis that, in essence, the whole or a part of the advance represents a loan which is (wholly or partly) to be repaid by way of one or more of those payments.

(6)For the purposes of subsection (5) it does not matter—

(a)that the repayment of the loan might be subject to any condition, or

(b)that the accounts of any person do not record a financial liability in respect of the whole or a part of the advance or that the whole or a part of the advance is not otherwise treated as representing a loan for the purposes of the accounts of any person,

but, subject to that, all relevant circumstances are to be taken into account in order to get to the essence of the matter.

(7)For the purposes of this section—

(a)the borrower and the lender are not connected with one another if that would otherwise be the case,

(b)if the borrower is not E, references to a person connected with the borrower include a person connected with E who would not otherwise be connected with the borrower, and

(c)“loan” includes any advance of money.