ITA07/S393 sets out the following two conditions for relief:
The company must therefore have been a close company for tax
purposes throughout the period beginning immediately after the
application of the money and ending with the payment of interest
giving rise to the claim for relief.
SP3/78 provides that relief should not be refused in a case where, after the application of any loan, the company ceases to be close, provided that all the other conditions for relief, including those referred to in SAIM10250, are satisfied.
CTM60700 onwards has guidance on close investment holding
No relief under ITA07/S392 is due unless at the time the ordinary share capital is acquired and when the interest is paid the company exists wholly or mainly for one of the purposes listed at (a) - (f) of CTM60710. A company will exist wholly or mainly for a particular purpose if at the requisite time that ‘purpose' is the end or ultimate object of the company (see the case of Lord v Tustain (65TC761)). As regards companies which commence liquidation, see CTM60780.