Corporation Tax Act 2009

452 Exchange gains and losses where loan not on arm’s length terms

(1) This subsection applies if—

(a) a company would be treated as having a debtor relationship in an accounting period if a claim were made under paragraph 6D(2) of Schedule 28AA to ICTA in relation to that period, and

(b) for that period there is a connection between that company and the company that would have the corresponding creditor relationship.

(2) If subsection (1) applies, it is assumed that such a claim is made for the purpose of determining the debits or credits to be brought into account for the purposes of this Part in respect of any exchange gains or losses arising in that period in respect of the liability representing that debtor relationship.

(3) Subsections (4) and (5) apply if—

(a) because of a claim made under paragraph 6D(2) of Schedule 28AA to ICTA more than one company is treated for any purpose as having a debtor relationship represented by the same liability, or

(b) because of the claim that is assumed to be made under subsection (2) more than one company is so treated.

(4) The total amount of the credits brought into account for the purposes of this Part in respect of exchange gains from those debtor relationships must not exceed the total amount of the debits brought into account for those purposes in respect of exchange losses from the corresponding creditor relationship.

(5) The total amount of the debits brought into account for those purposes in respect of exchange losses from those debtor relationships must not exceed the total amount of the credits brought into account for those purposes in respect of exchange gains from the corresponding creditor relationship.

(6) Section 466 (companies connected for an accounting period) applies for the purposes of this section.