(1) The Principal Act is amended -

(a) in section 247 by inserting the following after subsection (4A):

"(4B) Where a loan, or part of a loan, to an investing company has been applied -

(a) to subscriptions for the share capital of another company on the issue of the share capital by the other company, or

(b) in lending moneys to another company,

and such other company (in this subsection and subsection (4D) referred to as the 'other company') uses those subscriptions or moneys to provide specified intangible assets (within the meaning of section 291A) in respect of which allowances are to be made to it under section 284 as applied by section 291A, then, notwithstanding subsection (3) and section 243, the amount of the relief to be given in respect of so much (in this subsection and subsections (4C) and (4D) referred to as the ‘relevant interest’) of the interest paid in an accounting period by the investing company on the loan, or the part of the loan, as the case may be, as exceeds the sum of -

(i) any dividends or other distributions chargeable to corporation tax received by the investing company from the other company in that accounting period in respect of that share capital, and

(ii) any interest received by the investing company for that accounting period in respect of those moneys lent to the other company,

shall not exceed the amount of interest that would be -