There are certain situations and circumstances in which the charge to tax under the disguised remuneration provisions does not apply notwithstanding that a relevant step in relation to a loan or quasi-loan in E4.1059 is treated as having been taken. In most of these cases, the exclusion is expressly denied if there is a connection between the relevant step and a tax avoidance arrangement1.
Commercial transactions
This exclusion applies where P is treated as taking the relevant step by reason of the payment of a sum of money by way of a loan, and the loan is (at the time it is made) a loan on ordinary commercial terms (defined as in ITEPA 2003, s 176, but disregarding conditions B and C), and there is no connection between the relevant step and a tax avoidance arrangement2.
In order for a loan to be a loan on ordinary commercial terms it must be made by a lender in the ordinary course of his business of lending
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