Finance Act 2022

PART 5 Close companies, exchange gains and basis of accounting

Non-close QAHCs treated as close companies for certain purposes

37 Chapters 3 to 3B of Part 10 of CTA 2010 (charge to tax in case of loan to participator etc) apply to a QAHC that is not a close company as if the QAHC were a close company.

Exchange gains

38 (1) The Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) Regulations 2005 (S.I. 2005/3422) are amended as follows.

(2) In regulation 2 (interpretation), after the definition of “loan relationship” insert—

• ““QAHC” has the same meaning as in Schedule 2 to FA 2022;”.

(3) In regulation 5 (exchange gain or loss arising from loan relationship assets or liabilities), after paragraph (3) insert—

“(4) But where paragraph (1) applies in relation to loan relationship assets or liabilities of a QAHC and—

(a) an amount is recognised in the QAHC‘s accounts which arises from comparing at different times the fair value of the asset or liability (or in the case of regulation 5(1)(b) any part of it), and

(b) the change in fair value is attributable to any extent to fluctuations in the spot rate of exchange between the base currency of the QAHC and—

(i) the currency in which the asset or liability is denominated, or

(ii) another currency which is relevant to the value of the asset or liability,

the exchange gain or loss is instead calculated as set out in paragraph (5).

(5) The exchange gain or loss for any accounting period is the change in fair value between the earlier and the later time in that period that is attributable only to fluctuations in the spot rate of exchange between that currency, or those currencies, and the base currency of the QAHC.”

Amortised cost basis not required for certain connected companies relationships

39 (1) Section 349 of CTA 2009 (application of amortised cost basis to connected companies relationships) does not apply to a debtor relationship that is a connected companies relationship of a QAHC to the extent the money received under it is used to lend money under, or is used on the acquisition of, loan relationships falling within sub-paragraph (2).

(2) A loan relationship falls within this sub-paragraph if—

(a) it is a creditor relationship of the QAHC,

(b) it is dealt with in the QAHC’s accounts on the basis of fair value accounting,

(c) credits and debits which are to be brought into account for the purposes of Part 5 of CTA 2009 in respect of the relationship are not determined on an amortised cost basis of accounting.

(3) In this paragraph “creditor relationship”, “debtor relationship”, “fair value accounting”, “amortised cost basis of accounting” and “connected companies relationship” have the meanings they have in Part 5 of CTA 2009 (see sections 302, 313 and 348 of that Act).