Finance Act 1996

5 F1 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.K.

F1 (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1 (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Where—

(a) a liability to pay any amount under a debtor relationship of a company is released, and

(b) the release takes place in an accounting period for which [F2 an amortised cost basis of accounting] is used as respects that relationship,

[F3 no credit in respect of the release shall be required to be brought into account in the case of that company if any of the [F4 five] conditions set out below is satisfied.]

[F5 (4) Condition 1 is that the release is part of a [F6 statutory insolvency arrangement].

(5) Condition 2 is that the debtor relationship is one as respects which section 87 of this Act (accounting method where parties have a connection) [F7 applies]. [F8 This condition does not apply in the case of a credit required to be brought into account by virtue of paragraph 4A (deemed release on impaired debt becoming held by connected company).]

(6) Condition 3 is that—

(a) in the case of the company releasing the amount, the circumstances are as described in any of paragraphs (a) to (d) of paragraph 6A(1) below (insolvent liquidation etc),

(b) immediately before the time at which those circumstances arose in the case of that company, the relationship was one as respects which section 87 of this Act [F9 applies], and

(c) immediately after that time, the relationship was not one as respects which section 87 of this Act [F10 applies].

In the application of paragraphs (a) to (d) of paragraph 6A(1) below for the purposes of paragraph (a) above, references in those paragraphs to the company which has the creditor relationship are to be taken as references to the company releasing the amount.

(7) Condition 4 is that—

(a) the relationship is not one as respects which section 87 of this Act [F11 applies], and

(b) in the case of the company which has the debtor relationship, the circumstances are as described in any of paragraphs (a) to (d) of paragraph 6A(1) below.

In the application of paragraphs (a) to (d) of paragraph 6A(1) below for the purposes of paragraph (b) above, references in those paragraphs to the company which has the creditor relationship are to be taken as references to the company which has the debtor relationship.]

[F12 (8) Condition 5 is that the release is in consideration of, or of any entitlement to, shares forming part of the ordinary share capital of the debtor company.]

Textual Amendments

F1 Sch. 9 para. 5(1)-(2A) repealed (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 20(3), Sch. 42 Pt. 2(6)

F2 Words in Sch. 9 para. 5(3)(b) substituted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 20(4)

F3 Words in Sch. 9 para. 5(3) substituted (with effect in accordance with Sch. 8 para. 3(4) of the amending Act) by Finance Act 2004 (c. 12), Sch. 8 para. 3(2)

F4 Word in Sch. 9 para. 5(3) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 4 para. 11(3)

F5 Sch. 9 para. 5(4)-(7) inserted (with effect in accordance with Sch. 8 para. 3(4) of the amending Act) by Finance Act 2004 (c. 12), Sch. 8 para. 3(3)

F6 Words in Sch. 9 para. 5(4) substituted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 4 para. 11(4)

F7 Word in Sch. 9 para. 5(5) substituted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 20(5)

F8 Words in Sch. 9 para. 5(5) added (7.4.2005) by Finance Act 2005 (c. 7), Sch. 4 para. 11(5)

F9 Word in Sch. 9 para. 5(6)(b) substituted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 20(5)

F10 Word in Sch. 9 para. 5(6)(c) substituted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 20(5)

F11 Word in Sch. 9 para. 5(7)(a) substituted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 20(5)

F12 Sch. 9 para. 5(8) inserted (7.4.2005) by Finance Act 2005 (c. 7), Sch. 4 para. 11(6)