Details of the Section
2.Subsection (1) introduces changes to the Corporation Tax Act 2009 (CTA 2009).
3.Subsection (2) amends sections 345 and 346 of CTA 2009. These sections apply where a loan relationship is transferred from one company to another in the same group of companies. In such cases the loan relationship is transferred at a notional carrying value. If the company to which the loan relationships is transferred is itself sold out of the group within six years of the date of transfer there is a deemed disposal and reacquisition of the loan relationship for its fair value immediately before the transferee company leaves the group. As a consequence, amounts may arise under the loan relationships rules as credits and debits. However, this ‘de-grouping’ charge currently operates, in most cases, to bring into account for tax purposes only loan relationships credits.
4.The amendments made by subsection (2) remove the conditions that restrict the application of the rule to loan relationship credits, so that in future the de-grouping charge will bring into account both credits and debits in all cases.
5.Subsection (3) make the same change to the equivalent rules that apply to derivative contracts.
6.Subsection (4) provides that these changes have effect for de-groupings that take place on or after 1 April 2014.
