Part 5 U.K.Loan Relationships

Modifications etc. (not altering text)

C1 Pt. 5 applied (with effect in accordance with Sch. 24 paras. 13-16 of the amending Act) by Finance Act 2009 (c. 10), Sch. 24 para. 15(2)(3)

C2 Pt. 5 applied (with modifications) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 990(5), 1184(1) (with Sch. 2)

C3 Pt. 5 modified (15.11.2011 for specified purposes, 30.3.2012 for E.W.) by Localism Act 2011 (c. 20), ss., 240(5)(o), Sch. 24 para. 5; S.I. 2012/628, art. 3(b)

C4 Pt. 5 modified (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 2; S.I. 2011/2576, art. 5

C5 Pt. 5 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)

C6 Pt. 5 modified (30.9.2013) by The BRB (Residuary) Limited (Tax Consequences) Order 2013 (S.I. 2013/2242), arts. 1, 7

C7 Pt. 5 modified (with effect in accordance with reg. 1(2)(3) of the amending S.I.) by The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209), regs. 1(1), 11(3)-(6)

C8 Pt. 5 modified by 2010 c. 4, s. 356NC(1)-(4) (as inserted (1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6)

C9 Pt. 5 modified by 2010 c. 4, s. 356NB(1)-(4) (as inserted (1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6)

C10 Pt. 5 modified by 2007 c. 3, s. 809FZZ(9) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))

C11 Pt. 5 modified by 2010 c. 4, s. 676AG(1) (as inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 75)

Chapter 3 U.K.The credits and debits to be brought into account: general

Amounts recognised in determining a company's profit or loss U.K.

308 Amounts recognised in determining a company's profit or loss U.K.

(1) References in this Part to an amount recognised in determining a company's profit or loss for a period are references to an amount [F1 that is recognised in the company's accounts for the period as an item of profit or loss].

[F2 (1A) The reference in subsection (1) to an amount recognised in the company's accounts for the period as an item of profit or loss includes a reference to an amount that—

(a) was previously recognised as an item of other comprehensive income, and

(b) is transferred to become an item of profit or loss in determining the company's profit or loss for the period.

(1B) In subsections (1) and (1A) “item of profit or loss” and “item of other comprehensive income” each has the meaning that it has for accounting purposes.]

F3 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in s. 308(1) substituted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 5(2)

F2 S. 308(1A)(1B) inserted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 5(3)

F3 S. 308(2)(3) omitted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 5(4)

309 Companies without GAAP-compliant accounts U.K.

(1) If a company—

(a) draws up accounts which are not GAAP-compliant accounts, or

(b) does not draw up accounts at all,

this Part applies as if GAAP-compliant accounts had been drawn up.

(2) Accordingly, references in this Part to amounts recognised for accounting purposes are references to the amounts that would have been recognised if GAAP-compliant accounts had been drawn up for the period of account in question and any relevant earlier period.

(3) For this purpose a period of account is relevant to a later period if the accounts for the later period rely to any extent on amounts derived from the earlier period.

(4) In this section “GAAP-compliant accounts” means accounts drawn up in accordance with generally accepted accounting practice.

310 Power to make regulations about recognised amounts U.K.

(1) The Treasury may by regulations—

(a) make provision excluding from section 308(1) F4 ... amounts of a specified description, and

(b) make provision for or in connection with bringing into account in specified circumstances amounts in relation to which section 308(1) F4 ... does not have effect as a result of regulations under paragraph (a).

(2) The regulations may provide that section 308(1) F5 ... does not apply to specified amounts in a period of account so far as they derive from or otherwise relate to amounts brought into account in a specified way in a previous period of account.

(3) The regulations may—

(a) make different provision for different cases, and

(b) make provision subject to an election or to other specified conditions.

(4) The regulations may apply to periods of account beginning before they are made, but not earlier than the beginning of the calendar year in which they are made.

F6 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Words in s. 310(1)(a)(b) omitted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 6(a)

F5 Words in s. 310(2) omitted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 6(a)

F6 S. 310(5) omitted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 6(b)

311 Amounts not fully recognised for accounting purposes: introduction U.K.

(1) Section 312 applies for the purpose of determining the credits and debits which a company is to bring into account for a period for the purposes of this Part in the following case.

(2) The case is where—

(a) the company is, or is treated as, a party to a creditor relationship in the period, [F7 and]

[F8 (b) as a result of tax avoidance arrangements to which the company is at any time a party, an amount is (in accordance with generally accepted accounting practice) not fully recognised for the period in respect of the creditor relationship.]

F9 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 (4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) For the purposes of this section [F10 and section 312] an amount is not fully recognised for a period in respect of a relationship of a company F11 ... if—

(a) no amount in respect of the relationship F12 ... is recognised in determining its profit or loss for the period, or

(b) an amount is so recognised in respect of only part of the relationship F13 ....

[F14 (7) 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.

(8) In subsection (7) “arrangements” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.

(9) 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).]

Textual Amendments

F7 Word in s. 311(2)(a) inserted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 4 para. 2(2)(a)

F8 S. 311(2)(b) substituted (19.7.2011) for s. 311(2)(b)(c) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 4 para. 2(2)(b)

F9 S. 311(3)-(5A) omitted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 4 para. 2(3)

F10 Words in s. 311(6) inserted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 4 para. 2(4)(a)(i)

F11 Words in s. 311(6) omitted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 4 para. 2(4)(a)(ii)

F12 Word in s. 311(6)(a) omitted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 4 para. 2(4)(b)

F13 Word in s. 311(6)(b) omitted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 4 para. 2(4)(b)

F14 S. 311(7)-(9) inserted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 4 para. 2(5)

312 Determination of credits and debits where amounts not fully recognised U.K.

(1) In determining the credits and debits which a company is to bring into account for the period referred to in section 311(1) for the purposes of this Part in respect of—

(a) the creditor relationship mentioned in section 311(2), F15 ...

F15 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the assumption in subsection (2) is to be made.

[F16 (1A) Subsection (1B) applies in a case where—

(a) pursuant to the arrangements mentioned in section 311(2)(b), the company becomes, or is treated as becoming, a party to a debtor relationship, and

(b) an amount is (in accordance with generally accepted accounting practice) not fully recognised for any period in respect of the debtor relationship.]

(1B) In determining the debits and credits which a company is to bring into account for any period for the purposes of this Part in respect of the debtor relationship F17 ..., the assumption in subsection (2) is to be made.

(2) The assumption is that an amount in respect of the whole of the relationship in question is recognised in determining the company's profit or loss for the period.

(3) [F18 But—

(a) no debits are, as a result of this section, to be brought into account by the company in respect of the creditor relationship mentioned in section 311(2), and

(b)] the amount of any debits to be brought into account by the company for a period as a result of this section applying in respect of its debtor relationships must not exceed the amount of any credits to be brought into account by it for the period as a result of this section applying in respect of its creditor relationships.

(4) Subsection (5) applies in any case where—

(a) apart from this section any credits or debits are brought into account for a period for the purposes of this Part by the company in respect of a loan relationship, and

(b) the relationship is a creditor relationship within [F19 subsection (1)] or a debtor relationship within [F20 subsection (1B)].

(5) The credits and debits which are to be so brought into account as a result of this section are to be determined on the same basis of accounting as that on which the credits or debits mentioned in subsection (4)(a) are determined.

(6) In any other case, the credits and debits which are to be so brought into account as a result of this section are to be determined on an amortised cost basis of accounting.

Textual Amendments

F15 S. 312(1)(b) and preceding word omitted (27.7.2010) by virtue of Finance (No. 2) Act 2010 (c. 31), Sch. 5 para. 2(2)

F16 S. 312(1A) substituted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 4 para. 3(2)

F17 Words in s. 312(1B) omitted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 4 para. 3(3)

F18 Words in s. 312(3) substituted (19.7.2011) (with effect in accordance with Sch. 4 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 4 para. 3(4)

F19 Words in s. 312(4)(b) substituted (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), Sch. 5 para. 2(4)(a)

F20 Words in s. 312(4)(b) substituted (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), Sch. 5 para. 2(4)(b)