11[F1(1)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 respect of a related transaction, and
(b)that transaction is not a transaction at arm’s length,
the debits or credits to be brought into account 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.
This is subject to the exceptions in sub-paragraphs (1A), (2), (3) and (3A).]
[F2(1A)Notwithstanding section 80(5) of this Act, sub-paragraph (1) above shall not apply to debits or credits in respect of amounts which—
(a)fall to be adjusted for tax purposes under Schedule 28AA to the Taxes Act 1988 (provision not at arm’s length), or
(b)fall within that Schedule without falling to be so adjusted.
(1B)For the purposes of sub-paragraph (1A) above, an amount falls within Schedule 28AA to the Taxes Act 1988 without falling to be adjusted under that Schedule in a case where—
(a)the conditions in paragraph 1(1) of that Schedule are met, and
(b)the actual provision does not differ from the arm’s length provision.]
(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—
[F3(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.]
[F4(3A)Sub-paragraph (1) above shall not apply to any exchange gains or losses.]
(4)F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F6(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
F1Sch. 9 para. 11(1) substituted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 30
F2Sch. 9 para. 11(1A), (1B) inserted (with effect in accordance with s. 37 of the amending Act) by Finance Act 2004 (c. 12), Sch. 5 para. 6(3)
F3Sch. 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)
F4Sch. 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)
F5Sch. 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)
F6Sch. 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)
C1Sch. 9 para. 11 excluded (15.1.2001) by 2000 c. 38, s. 250, Sch. 26 para. 35(1); S.I. 2000/3376, art. 2