Section 23 | Exceptions from duty to deduct tax: qualifying private placements

(1)In Chapter 3 of Part 15 of ITA 2007 (deduction of tax from certain payments of yearly interest), after section 888 insert—

888AQualifying private placements

(1)The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on a qualifying private placement.

(2)“Qualifying private placement” means a security—

(a)which represents a loan relationship to which a company is a party as debtor,

(b)which is not listed on a recognised stock exchange, and

(c)in relation to which such other conditions as the Treasury may specify by regulations are met.

(3)The conditions which may be specified under subsection (2)(c) include conditions relating to—

(a)the security itself,

(b)the loan relationship represented by the security,

(c)the terms on which, or circumstances under which, the security or loan relationship is entered into,

(d)the company which is party to the loan relationship as debtor,

(e)any person by or through whom a payment of interest on the security is made, or

(f)the holder of the security.

(4)Regulations under this section may make provision about the consequences of failing to make a deduction under section 874, in respect of a payment of interest on a security, in cases where the person required to make the deduction had a reasonable, but mistaken, belief that the security was a qualifying private placement.

(5)Regulations under this section may—

(a)make different provision for different cases;

(b)contain incidental, supplemental, consequential and transitional provision and savings.

(6)In this section “loan relationship” has the same meaning as in Part 5 of CTA 2009.

(2)Any power conferred on the Treasury by virtue of subsection (1) to make regulations comes into force on the day on which this Act is passed.

(3)So far as not already brought into force by subsection (2), the amendment made by this section comes into force on such day as the Treasury may by regulations appoint.

(4)Section 1014(4) of ITA 2007 (regulations etc subject to annulment) does not apply to regulations under subsection (3).