632Transferee leaving group because of exempt distribution
(1)This section applies if—
(a)the transferee ceases to be a member of the relevant group 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), and
(b)there is a chargeable payment within the meaning of section 214(2) of that Act (chargeable payments connected with exempt distributions) within 5 years after the making of the distribution.
(2)If condition A or B is met, this Part applies as if—
(a)the transferee had assigned its rights and liabilities under the relevant derivative contract immediately before that chargeable payment was made,
(b)the assignment had been for consideration of an amount equal to their fair value immediately before the transferee ceased to be a member of the relevant group, and
(c)the transferee had immediately reacquired them for consideration of the same amount.
(3)Condition A is that if subsection (2) applied a credit would be brought into account in accordance with this Part by the transferee because of subsection (2)(a) and (b).
(4)Condition B is that—
(a)the transferee has a hedging relationship between the relevant derivative contract and a creditor relationship, and
(b)because of section 346(2)(a) and (b) (transferee leaving group because of exempt distribution) a credit is to be brought into account by the transferee for the purposes of Part 5 (loan relationships) in respect of the creditor relationship.