Finance Act 1997 (c. 16)

SCHEDULES

SCHEDULE 13 Loan relationships: amendment of transitional provisions

Opening valuations as at 1st April 1996

3 After paragraph 3 there shall be inserted the following paragraph—

“Adjustment of opening value where new accounting basis adopted as from an accounting period beginning on 1st April 1996

3A (1) This paragraph applies in the case of a continuing loan relationship of a company where—

(a) the company’s first relevant accounting period begins on 1st April 1996;

(b) in that period amounts are brought into account for the purposes of this Chapter in respect of the relationship on a mark to market basis of accounting;

(c) amounts falling to be brought into account in respect of the relationship for the purposes of corporation tax in the accounting period ending with 31st March 1996 were or (if there had been any) would have been so brought into account otherwise than on a mark to market basis of accounting; and

(d) an opening valuation of the relationship falls to be made, as at the beginning of the accounting period immediately following the first relevant accounting period, for the purpose of bringing amounts into account on a mark to market basis of accounting.

(2) Where this paragraph applies in the case of a continuing loan relationship of a company, the opening valuation mentioned in sub-paragraph (1)(d) above shall be made disregarding any amount of interest that has accrued in the company’s first relevant accounting period or in any of its accounting periods preceding that period.”