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Corporation Tax Act 2009

Changes over time for: Cross Heading: Exclusion of credits for connected companies debts on release or reversal of impairments

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Changes and effects yet to be applied to Part 5 Chapter 6 Crossheading Exclusion-of-credits-for-connected-companies-debts-on-release-or-reversal-of-impairments:

  • S 1217N(3) modified by 2010 c. 4 s. 357UI (as inserted) by 2015 c. 21 s. 1

Changes and effects yet to be applied to the whole Act associated Parts and Chapters:

Whole provisions yet to be inserted into this Act (including any effects on those provisions):

Exclusion of credits for connected companies debts on release or reversal of impairmentsU.K.

358Exclusion of credits on release of connected companies debts: generalU.K.

(1)This section applies if—

(a)a liability to pay an amount under [F1a debtor relationship of a company (“D”) is released, and]

(b)the release takes place in an accounting period for which—

(i)an amortised cost basis of accounting is used in respect of the relationship, and

(ii)the relationship is a connected companies relationship.

(2)[F2D] is only required to bring a credit into account in respect of the release for the purposes of this Part if

[F2(a)it is a deemed release, or

(b)it is a release of relevant rights.]

(3)In subsection (2) “deemed release” means a release which is deemed to occur because of—

(a)section 361 (acquisition of creditor rights by connected company at undervalue), or

(b)section 362 (parties becoming connected where creditor's rights subject to impairment adjustment).

[F3(4)For the purposes of this section “relevant rights” means rights of a company (“C”) that—

(a)were acquired by C in circumstances that, but for the application of the corporate rescue exception or the debt-for-debt exception, would have resulted in a deemed release under section 361(3), or

(b)were acquired by another company in such circumstances and transferred to C by way of an assignment or assignments.

(5)The amount of the credit that D is required to bring into account in respect of a release of relevant rights is—

(a)the amount of the discount received on the acquisition, less

(b)the sum of any credits brought into account in respect of that amount (whether in the accounting period in which the release takes place or in a previous accounting period) by C or, in a case within subsection (4)(b), by the company that acquired the rights or any company to which the rights were subsequently assigned.

(6)A reference in subsection (5) to the amount of the discount received on the acquisition is to the amount that would have been treated as released under section 361(4) on the acquisition, but for the application of the corporate rescue exception or the debt-for-debt exception.]

Textual Amendments

F1Words in s. 358(1)(a) substituted (with effect in accordance with Sch. 15 para. 3(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 15 para. 2(3)(a) (with Sch. 15 para. 4)

F2Words in s. 358(2) substituted (with effect in accordance with Sch. 15 para. 3(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 15 para. 2(3)(b) (with Sch. 15 para. 4)

F3S. 358(4)-(6) inserted (with effect in accordance with Sch. 15 para. 3(3) of the amending Act) by Finance Act 2010 (c. 13), Sch. 15 para. 2(3)(c) (with Sch. 15 para. 4)

Modifications etc. (not altering text)

C1S. 358 excluded by 2010 c. 4, s. 814D(10) (as inserted (with effect in accordance with Sch. 29 para. 51 of the amending Act) by Finance Act 2013 (c. 29), Sch. 29 para. 2)

359Exclusion of credits on release of connected companies debts during creditor's insolvencyU.K.

(1)This section applies if—

(a)a liability to pay an amount under a company's debtor relationship is released,

(b)the release takes place in an accounting period for which an amortised cost basis of accounting is used in respect of that relationship,

(c)condition A, B, C, D or E in section 357 is met in relation to the company releasing the amount,

(d)immediately before the time when the condition in question was first met the relationship was a connected companies relationship, and

(e)immediately after that time it was not such a relationship.

(2)The company is not required to bring into account a credit in respect of the release for the purposes of this Part.

360Exclusion of credits on reversal of impairments of connected companies debtsU.K.

(1)If an impairment loss is prevented from being brought into account by section 354, no credit in respect of any reversal of the impairment may be brought into account for the purposes of this Part.

(2)Nothing in this section affects the credits to be brought into account for the purposes of this Part in respect of exchange gains or losses arising from a debt.

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