Corporation Tax Act 2009

345 Transferee leaving group otherwise than because of exempt distribution

(1) This section applies if—

(a) the transferee ceases to be a member of the relevant group, and

(b) it does not so cease just because of a distribution which is exempt as a result of—

(i) section 213(2) of ICTA (exempt distributions), or

(ii) section 213A of ICTA (exempt distributions: division of business).

(2) If condition A or B is met, this Part applies as if—

(a) the transferee had assigned the asset or liability representing the relevant loan relationship immediately before ceasing to be a member of the relevant group,

(b) the assignment had been for consideration of an amount equal to the fair value of the asset or liability at that time, and

(c) the transferee had immediately reacquired the asset or liability for consideration of the same amount.

(3) Condition A is that if this Part applied as mentioned in subsection (2) because of that subsection applying, a credit would be brought into account for the purposes of this Part by the transferee because of subsection (2)(a) and (b).

(4) Condition B is that—

(a) the relevant loan relationship is a creditor relationship,

(b) the transferee has a hedging relationship between a derivative contract and the creditor relationship, and

(c) because of section 631(2)(a) and (b) (transferee leaving group otherwise than because of exempt distribution) a credit is to be brought into account by the transferee for the purposes of Part 7 (derivative contracts) in respect of the derivative contract.

(5) Section 707 (meaning of “hedging relationship”) applies for the purposes of this section.