60(1)This paragraph applies if—U.K.
(a)an authorised unit trust or open-ended investment company holds a deeply discounted security on the last day of the unit trust's or company's last accounting period beginning before 1 October 2002 (“the last old day”),
(b)the security was not transferred or redeemed on that day,
(c)there is an amount which, if the unit trust or company had made a transfer of that security on that day, by selling it for its adjusted closing value—
(i)would have been charged under paragraph 1 of Schedule 13 to FA 1996 under Case III or IV of Schedule D, or
(ii)would have been eligible for relief from tax on a claim for the purposes of paragraph 2 of Schedule 13 to FA 1996, and
(d)that amount has not fallen to be brought into account under paragraph 64(3) of Schedule 25 to FA 2002.
(2)That amount must be brought into account as a non-trading credit, or (as the case may be) a non-trading debit, for the purposes of Part 5 (loan relationships) for the relevant accounting period.
(3)The relevant accounting period is the accounting period in which falls the earliest of—
(a)the first day that falls after the last old day and is a day on which, under the terms on which the security was issued, the holder of the security is entitled to require it to be redeemed,
(b)the day on which the security is redeemed, and
(c)the day on which the unit trust or company makes a disposal of the security.
(4)For the purposes of sub-paragraph (1)(c), the “adjusted closing value” of a deeply discounted security held by the unit trust or company on the last old day is the amount which for the purposes of Chapter 2 of Part 4 of FA 1996 was the opening value, as at the first day of the unit trust's or company's first accounting period beginning on or after 1 October 2002, of the unit trust's or company's rights and liabilities under the relationship represented by that security.
(5)Paragraph 5(7) of Schedule 15 to FA 1996 (determination of opening value where accruals basis of accounting is used) applies for the purposes of sub-paragraph (4) as it applies for the purposes of paragraph 5 of that Schedule, but—
(a)taking the reference to 1 April 1996 as a reference to the first day of the unit trust's or company's first accounting period beginning on or after 1 October 2002, and
(b)applying paragraph 4 of that Schedule (determination of amounts treated as accruing on or after 1 April 1996) (as it had effect immediately before 1 April 2009) for these purposes with the same modification.
(6)In this paragraph—
“creditor relationship” has the same meaning as in Part 5,
“deeply discounted security” has the same meaning as in that Chapter (see section 430 of that Act),
“open-ended investment company” has the same meaning as in section 468A of ICTA,
“redeem” means—
make a disposal, within the meaning of Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities), except by a transfer within the meaning of that Chapter, or
convert as mentioned in section 437(1)(c) of that Act, and
“transfer” has the same meaning as in that Chapter.
(7)In this paragraph “the relevant period” has the same meaning as in section 409.