CITM7070 - Withdrawal of Relief: Value received as repayment of loan

FA02/SCH16/PARA31; ITA/s363

Where the investment eligible for relief under the CITR scheme is a loan it is necessary to calculate average capital balances in order to determine the invested amount (see CITM6090) and to establish whether or not relief needs to be withdrawn (see CITM7050).

For the purposes of these calculations where an investor receives any value (see CITM7060) (other than insignificant value) from the CDFI during the six year period (the ‘period of restriction’) commencing one year before the investment date, the value is treated as if it were a repayment of the loan.

Value received after the loan is made is treated as if it were as a loan repayment made on the first day of the year of the period of restriction in which it was received. Any value received during the year before the loan is made being treated as if it were as a loan repayment made on the day the loan was made.

An amount is regarded of insignificant value if it is less than £1,000 or (even if it is more than £1,000) if it is insignificant in the context of the average capital balance for the year in question. See CITM7100 for further commentary on receipts of insignificant value.

Where an investor has made more than one investment in a CDFI from which value is received the amount of value received is allocated across the investments held in proportion to the amount of each investment (see CITM7130).