Section 197 | Qualifying conditions for purposes of section 198

(1)Conditions A to F are the qualifying conditions for the purposes of section 198.

(2)Condition A is that one of the affected persons ... has borrowing liabilities.

(3)Condition B is that those liabilities are to any extent the subject of a guarantee provided by a company (“the guarantor company”).

(4)Condition C is that, in calculating the profits and losses of the borrower for tax purposes, the amounts to be deducted in respect of interest or other amounts payable in respect of the borrowing are required to be reduced (whether or not to nil) under section 147(3) or (5).

(5)Condition D is that that reduction is required because of section section 153A.

(6)Condition E is that—

(a)a payment (the “balancing payment”) is made, or

(b)two or more payments (the “balancing payments”) are made,

by the guarantor company to the borrower.

(7)Condition F is that the sole or main reasons for making that payment or those payments are—

(a)that section 147(3) or (5) applies because of section section 153A, or

(b)that sections 192 to 194 apply.

(8)For the purposes of this Chapter, “borrowing” and “guarantee” have the meanings they have in sections 153A and 153B (see section 154).