40. Relief on Interest Payments

– in the House of Commons at 9:30 pm on 22nd March 1993.

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Resolved,That—(1) In section 355 of the Income and Corporation Taxes Act 1988, after subsection (1) there shall be inserted the following subsections—(1A) Where, in the case of any loan—

  1. (a) the condition specified in subsection (1)(a) above would not (apart from this subsection) be fulfilled with respect to any land, caravan or house-boat by reason of its having ceased at any time to be used by a particular person as his only or main residence; and
  2. (b) the borrower's intention at that time was to take steps, before the end of the period of 12 months after the day on which it ceased to be so used, with a view to the disposal of that land, caravan or house-boat,
that condition shall be treated in relation to interest on that loan as continuing to be fulfilled with respect to that land, caravan or house-boat (as well as with respect to any other land, caravan or house-boat with respect to which it is in fact fulfilled) from that time until the end of that period or (if sooner) the abandonment by the borrower of his intention to dispose of the land, caravan or house-boat in question.(1B) Where—
  1. (a) subsection (1A) above has effect in the case of any loan ('the first loan') so that the condition specified in subsection (1)(a) above is treated in relation to any person as fulfilled with respect to any land, caravan or house-boat, and
  2. (b) there is another loan raised by the borrower to defray money to be applied as mentioned in section 354(1) with a view to the use of any other land, caravan or house-boat as the borrower's only or main residence,
interest on the other loan shall be treated as eligible for relief to the same extent (if any) as if no interest were payable on the first loan.
(2) In subsection (2) of that section, after "subsection (1)" there shall be inserted "or (1A)".(3) In section 365 of that Act, after subsection (1) there shall be inserted the following subsections—(1A) Where, in the case of any loan—
  1. (a) the condition specified in subsection (1)(d) above would not (apart from this subsection) be fulfilled with respect to any land by reason of its having ceased at any time to be used by a particular person as his only or main residence; and
  2. (b) the intention at that time of the person to whom the loan was made, or of each of the annuitants owning an estate or interest in that land, was to take steps, before the end of the period of 12 months after the day on which it ceased to be so used, with a view to the disposal of his estate or interest,
that condition shall be treated in relation to interest on that loan as continuing to be fulfilled with respect to the land from that time until the end of that period of (if sooner) the abandonment by that person or any of those annuitants of his intention to dispose of his estate or interest.
(1B) If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case.(4) In consequence of paragraphs (1) to (3) of this Resolution, that Act shall have effect with the following consequential amendments—
  1. (a) in section 354(1), for "to (6)" there shall be substituted "to (4)";
  2. (b) sections 354(5) and (6), 356D(9), 357(4) and 371 shall cease to have effect;
  3. (c) in section 370(1), for "371" there shall be substituted "372";
  4. (d) in section 370(6), after paragraph (b) there shall be inserted— "and section 355(1A) shall have effect as if after the word 'used' in paragraph (a) there were inserted the words 'wholly or to a substantial extent'.";
  5. (e) in section 370(7), after paragraph (a) there shall be inserted the following paragraph—
aa subsections (1A) and (1B) of that section shall have effect as if—
  1. (i) after the word 'used' in paragraph (a) of subsection (IA) there were inserted the words 'wholly or partly';
  2. (ii) for the words 'subsection (1)(a)', wherever they occur, there were substituted the words 'subsection (1)';
  3. (iii) for the words 'land, caravan or house-boat', wherever they occur without being immediately preceded by the word 'other', there were substituted the word 'dwelling'; and
  4. (iv) for the words 'other land, caravan or house-boat', wherever they occur, there were substituted the words 'land, caravan or house-boat'; and".
(5) This Resolution shall have effect in relation to payments of interest made on or after 16th March 1993 (whenever falling due).(6) Where this Resolution applies by virtue of paragraph (5) of this Resolution in a case where the condition specified in section 355(1)(a) or 365(1)(d) of the Income and Corporation Taxes Act 1988 ceased to be fulfilled before 16th March 1993, the power of the Commissioners of Inland Revenue by virtue of this Resolution to extend the period specified in section 355(1A) or 365(1A) of that Act—
  1. (a) shall be exercisable in any case in relation to that period irrespective of when that period began in that case; and
  2. (b) in so far as it is exercisable in relation to the period specified in section 355(1A) of that Act where an equivalent period has been extended in any case under section 354(6) or 371(2) or (3) of that Act, shall be deemed to have been exercised so that (subject to any further extensions) the period in question ends when that equivalent period would have ended.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.