CITM4340 - Alternative Finance Arrangements: Modifying the CITR rules to accommodate AFAs
FA05/s47 arrangements
Where an arrangement falls within FA05/s47, the following table shows how the CITR rules are modified to equate aspects of conventional loans with those of FA05/s47 arrangements.
| Conventional Loan | FA05/s47 arrangement |
| Amount of loan | Purchase price of the
asset transferred between the parties
|
| Loan being drawn down
over a period of time
| Transfer of an asset in
instalments
|
| Date a loan is first
drawn down
| Date of the first
instalment payment for an asset
|
| Amount drawn down | Value of instalment
payments transferred
|
| Repayment of loan capital
(for the purposes of calculating the amount of capital outstanding on the ‘loan’) | Each payment of the sale price (less any amount of alternative finance return included in the payment) |
| Beneficial owner of the loan | Person beneficially
entitled to payment of the sale price
|
| Disposal of all or part of a loan | Disposal of the right to
receive all or part of the sale price
|
The CITR rules are also modified such that the transfer of an asset between a CDFI and one of its investors under a FA05/s47 arrangement that is treated as a qualifying investment is not caught a receipt of value ( CITM7110).
