»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp regulations: the relevant debtor

»Ê¹ÚÌåÓýapp ‘relevant debtorâ€� within the Qualifying Private Placement Regulations is the company that ultimately stands in the position of debtor in respect of the money lent by the creditor. Where there is a chain of companies through which the interest is paid, the legislation regards the debtor as the company that has borrowed the money on its own account, not any intermediary through whom the payment is made.

Regulation 3 imposes further conditions in relation to the debtor.

»Ê¹ÚÌåÓýapp debtor must hold a creditor certificate

»Ê¹ÚÌåÓýapp relevant debtor must hold a creditor certificate for each creditor to be paid gross at the time each interest payment is made. A private placement can be made up of more than one security. In order for an individual security to qualify for the exemption, the debtor needs a certificate for each creditor under that security, but not necessarily for each creditor under the private placement as a whole.

Where a placement is issued to more than one creditor, some may provide a certificate while others do not. If the debtor holds certificates from all the creditors in relation to a particular security (and the other conditions are met), interest on that security may be paid gross even though the placement also includes securities for which certificates are not held.

»Ê¹ÚÌåÓýapp debtor and the creditor must not be connected

»Ê¹ÚÌåÓýapp debtor must reasonably believe that it is not connected to the creditor. ‘Connectedâ€� here takes its meaning from ITA07/S993.

»Ê¹ÚÌåÓýapp security must be entered into for commercial reasons

»Ê¹ÚÌåÓýapp debtor must enter into the security for genuine commercial reasons and not as part of a ‘tax advantage schemeâ€�. A tax advantage scheme is a scheme that has as its main purpose or one of its main purposes, the obtaining of a tax advantage within CTA10/S1139 â€� that is avoiding or reducing a tax charge.

In keeping with similar legislative provisions elsewhere, the regulations do not define what is meant by ‘main purposeâ€� or ‘one of the main purposesâ€� or what is meant by ‘genuine commercial reasonsâ€�. »Ê¹ÚÌåÓýappse expressions are to be given their normal meaning as ordinary English words. »Ê¹ÚÌåÓýappy have to be applied objectively, having regard to the full context and facts. »Ê¹ÚÌåÓýapp rule can apply where a company seeks to use the exemption as part of wider tax avoidance arrangements.