Commentary on Sections Overview Overview Section 152: Arm’s length provision where actual provision relates to securities
319.This section deals with what is generally known as “thin capitalisation”. It provides that, where a security is issued between connected companies, in applying the basic rule in section 147, account must be taken as to whether the loan concerned would have been made, and would have been made on the same terms, if the parties had been at arm’s length. It is based on paragraph 1A(1) to (5) of Schedule 28AA to ICTA.