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Finance Act 2011

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5After section 455 insert—E+W+S+N.I.

DerecognitionE+W+S+N.I.

455ADebits arising from derecognition of creditor relationships

(1)This section applies where—

(a)a company is at any time a party to tax avoidance arrangements,

(b)as a result of those arrangements, a creditor relationship to which the company is party, or any part of such a relationship, is (in accordance with generally accepted accounting practice) derecognised by the company, and

(c)the company continues to be a party to the creditor relationship immediately after the transaction or other event giving rise to the derecognition.

(2)No debit that would apart from this section be brought into account by the company for the purposes of this Part as a result of the derecognition is to be so brought into account.

(3)An amount that would be brought into account for the purposes of this Part as respects any matter apart from this section—

(a)is treated for the purposes of section 464(1) (priority of this Part for corporation tax purposes) as if it were so brought into account, and

(b)accordingly, may not be brought into account for any other corporation tax purposes as respects that matter.

(4)For the purposes of this section a company is to be treated as a party to a creditor relationship even though it has disposed of its rights under the relationship to another person—

(a)under a repo or stock lending arrangement, or

(b)under a transaction which is treated as not involving any disposal as a result of section 26 of TCGA 1992 (mortgages and charges not to be treated as disposals).

(5)For the purposes of this section arrangements are “tax avoidance arrangements” if the main purpose, or one of the main purposes, of any party to the arrangements, in entering into them, is to obtain a tax advantage.

(6)In subsection (5) “arrangements” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.

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