252 Restriction of relief to individuals on loans applied in acquiring interest in companies which become quoted companies

Summary

This section abolishes, subject to certain transitional arrangements, the tax relief available under section 248 as extended by section 250 in respect of loans applied to acquire an interest in quoted companies.

No relief is to be given in respect of a loan applied on or after 29 January, 1992 if at the time the loan is applied the company is a quoted company. The relief for other loans used to acquire an interest in a company is, irrespective of the date the loan was applied or the status of the company at the time the loan was applied, to be phased out over a 3 year period if, at “the specified date”, the company is a quoted company. The specified date is determined both by reference to the date the loan was applied and the date the company becomes quoted. The relief is reduced to 70 per cent in the first year of phasing out, 40 per cent in the second year and to zero in the third and subsequent years.

Relief continues to be available in respect of loans to acquire an interest in unquoted companies.

Details

Definitions

(1) “loan” is a loan applied for any of the purposes specified in the principal section (that is, section 248 as extended by section 250). The purposes mentioned in section 248 are —

• the acquisition of any part of the ordinary share capital of a trading company (including a “Case V income” company) or of the holding company of such a company,
• lending to any such company for the purpose of its business or of the business of a connected company, and
• paying off any such loan.

“quoted company” is a company whose shares —

• are listed in the official list of the Irish Stock Exchange or any other stock exchange, or
• are quoted on an unlisted securities market (this includes both the Developing Companies Market (DCM) and the exploration securities market of the Irish Stock Exchange).

“the specified date”, in relation to a loan, is —

• 6 April, 1992 (where the loan was applied on or before 5 April, 1989),
• 6 April, 1993 (where the loan was applied between 6 April, 1989 and 5 April, 1990),
• 6 April, 1994 (where the loan was applied on or after 6 April, 1990), or
• if later, 1 January in the second next tax year after the tax year in which the company whose shares were acquired as a result of the loan or to which the money was loaned becomes a quoted company (for example, if a company becomes a quoted company on 1 June, 2002, the specified date in relation to any loan which was used to acquire the share capital of that company or which was loaned to that company is 1 January, 2004).

Restriction of relief

(2) If at the specified date in relation to a loan a company, part of whose ordinary share capital was acquired or to whom the money was lent, is a quoted company, the relief under the principal section is to be phased out.

In the first year of phasing out (which is the tax year starting with the specified date) the relief is to be reduced to 70 per cent of what it would otherwise have been. In the second year (which is the tax year following that which started with the specified date) it is to be reduced to 40 per cent. No relief will be available for the third and subsequent tax years. Once phasing out has begun it will not be stopped or reversed even if the company should revert to being an unquoted company.

(3) This phasing out of relief procedure does not apply where a loan is applied on or after 29 January, 1992 (that is, applied for a purpose specified in section 248) if at the time the loan is applied the company, part of whose share capital was or is acquired or to whom the money was or is loaned, is a quoted company. In such a case no relief whatever is available.

Relevant Date: Finance Act 2021