Finance Act 1996

Transactions not at arm’s length U.K.

11 (1) [F1 Subject to sub-paragraphs (2) to (3A) below,] where— U.K.

(a) debits or credits in respect of a loan relationship of a company fall to be brought into account for the purposes of this Chapter in accordance with an authorised accounting method,

(b) those debits or credits relate to amounts arising from, or incurred for the purposes of, a related transaction, and

(c) that transaction is not a transaction at arm’s length,

the debits or credits given by that method shall be determined on the assumption that the transaction was entered into on the terms on which it would have been entered into between independent persons.

(2) Sub-paragraph (1) above shall not apply to debits arising from the acquisition of rights under a loan relationship where those rights are acquired for less than market value.

(3) Sub-paragraph (1) above does not apply—

[F2 (a) in the case of any related transaction between two companies that are—

(i) members of the same group, and

(ii) within the charge to corporation tax in respect of that transaction; or

(b) in relation to a member of a group of companies, in the case of any transaction which is part of a series of transactions having the same effect as a transaction falling within paragraph (a) above.]

[F3 (3A) Sub-paragraph (1) above shall not apply to any exchange gains or losses.]

(4) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F5 (5) In this paragraph references to a company which is a member of a group of companies shall be construed in accordance with section 170 of the Taxation of Chargeable Gains Act 1992.]

Textual Amendments

F1 Words in Sch. 9 para. 11(1) substituted (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by Finance Act 2002 (c. 23), s. 79(2), Sch. 23 Pt. 1 para. 10(2) (with Sch. 23 Pt. 3 para. 25)

F2 Sch. 9 para. 11(3)(a)(b) substituted (28.7.2000 with effect in relation to transactions entered into, or series of transactions begun, on or after 1.4.2000) by 2000 c. 17, s. 102, Sch. 29 Pt. II para. 44(2)(5)

F3 Sch. 9 para. 11(3A) inserted (24.7.2002 with effect as mentioned in s. 79(3) of the amending Act) by Finance Act 2002 (c. 23), s. 79(2), Sch. 23 Pt. 1 para. 10(3) (with Sch. 23 Pt. 3 para. 25)

F4 Sch. 9 para. 11(4) repealed (24.7.2002 with effect in accordance with s. 79(3) of and Sch. 23 to the repealing Act) by Finance Act 2002 (c. 23), s. 141, Sch. 40 Pt. 3(10)

F5 Sch. 9 para. 11(5) substituted (28.7.2000 with effect in relation to transactions entered into, or series of transactions begun, on or after 1.4.2000) by 2000 c. 17. s. 102, Sch. 29 Pt. II para. 44(3)

Modifications etc. (not altering text)

C1 Sch. 9 para. 11 excluded (15.1.2001) by 2000 c. 38, s. 250, Sch. 26 para. 35(1); S.I. 2000/3376, art. 2