is a tax relief given to individuals and companies that invest in accredited
Community Development Finance Institutions (CDFIs). The relief is not
available (or is reduced) where the CDFI makes payments, or other returns of
value, to the investor within a specified six year period, unless the
payments are qualifying payments.
anti-avoidance provision is widely drawn and currently deposits by the CDFI
in a bank are not treated as qualifying payments. Consequently, if a CDFI
made a deposit with a bank, this would reduce the amount of CITR available
to the bank for any investment it made in the CDFI.
Legislation will be introduced in Finance Bill 2008 to ensure that any
deposits from the CDFI to a bank that are made in the ordinary course of its
banking arrangements will not reduce the amount of CITR available to the
bank in respect of its investment. The change will be treated as always
having had effect.
This is a sensible
change reducing the scope of a too-widely drawn avoidance provision.
The retrospective effect should be welcomed as the change should be
wholly relieving in its effect.