Introduction Details of the Section
2.Subsection (1) of the section inserts a new section 888A into Chapter 3 of Part 15 of the Income Tax Act 2007 (ITA).
3.Subsection (1) of new section 888A provides that the duty to deduct income tax from yearly interest does not apply to a payment of interest on a ‘qualifying private placement’. This is defined in subsection (2) as a security which represents a debtor loan relationship of a company, is not listed on a recognised stock exchange and meets such other conditions as are set in regulations. Subsection (6) provides that ‘loan relationship’ takes its meaning from Part 5 of the Corporation Tax Act 2009.
4.Subsections (3) to (5) of new section 888A set out the provisions that apply to regulations made under this section. They provide, among other matters, that the regulations may set out conditions relating to the security itself, the debtor company, the holder of the security, the consequences where a payment is made in the reasonable but mistaken belief that the security was a qualifying private placement, and to transitional and similar cases.
5.Subsection (2) to (4) of the section set out the commencement provisions. The power to make regulations under the new section 888A comes into force on and after the date of Royal Assent to Finance Act 2015. The exemption from the duty to deduct income tax will apply from a date to be set in regulations.