Section 406 | Effect of recovery of capital in the case of some loans

(1)This section applies if the individual to whom a loan is made to which section 392, 396, 398 or 401 applies recovers any amount of capital from the company, partnership or co-operative concerned at any time after the loan is used.

(2)The individual is treated for the purposes of this Chapter as having repaid that amount out of the loan at that time, whether or not such a repayment occurred.

(3)Accordingly, only part of the interest that, apart from any such repayment, would be payable on the loan for any period after that time and eligible for relief is so eligible.

(4)That part is so much of that interest as is attributable to the amount of the loan after the repayment.

(5)In the case of a loan to which section 386 applies (loans partly meeting requirements), subsection (3) applies instead of section 386(3) (under which repayments are apportioned between the qualifying and non-qualifying parts of such loans).

(6)The cases in which an individual is treated as having recovered an amount of capital for the purposes of this section are set out in section 407(1) to (3).