CITM4310 – Alternative Finance Arrangements: Introduction
FA05/s54A
The (CITR) scheme is based around qualifying investments being
made in Community Development Finance Institutions (CDFIs) who then
onward-invest the funds raised by making relevant investments in
qualifying enterprises.
The range of ‘qualifying investments’ (
CITM4010) and ‘relevant
investments’ (
CITM3030) is limited to investments that
take the form of loans, securities or shares. So financial
arrangements that in substance are akin to such instruments but
which take some other legal form would not (without special
provision) fit within the scheme.
In some areas of tax it is the substance of a financial
arrangement that takes precedence over its form in determining the
tax treatment. In particular, FA05/s4657 provide that a number of
financial arrangements that comply with the principles of
Sharia’a law (Alternative Financial Arrangements (or AFAs))
are taxed in a similar way to their conventional counterparts for
certain purposes.
FA05/s54A (inserted by Treasury Order SI2008/1821) extends
that treatment to the CITR scheme. It provides that certain AFAs
that replicate the effect of investments or loans at interest are
to be treated as if they were ‘loans’ for all CITR
purposes.
| CITM4320 | Details of the type of
AFAs that are treated as ‘loans’ for CITR purposes
|
| CITM4330 – CITM4360 | Explain how the CITR
rules are modified to accommodate AFAs
|
There is further guidance on alternative finance at CFM6050 and SAIM2250.
