Corporation Tax Act 2009 (c. 4)

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)

Chapter 4 U.K. Continuity of treatment on transfers within groups or on reorganisations

Modifications etc. (not altering text)

C3 Pt. 5 Ch. 4 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 5

C4 Pt. 5 Ch. 4 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)

Transferee leaving group after replacing transferor as party to loan relationship U.K.

346 Transferee leaving group because of exempt distribution U.K.

(1) This section applies if—

(a) the transferee ceases to be a member of the relevant group just because of a distribution which is exempt [F1 as a result of section 1075 of CTA 2010 (exempt distributions),] and

(b) there is a chargeable payment within the meaning of [F2 section 1088(1) of CTA 2010] (chargeable payments connected with exempt distributions) within 5 years after the making of that distribution.

(2) If condition A or B is met, this Part applies as if—

(a) the transferee had assigned the asset or liability representing the relevant loan relationship immediately before the chargeable payment was made,

(b) the assignment had been for consideration of an amount equal to the fair value of the asset or liability immediately before the transferee ceased to be a member of the relevant group, and

(c) the transferee had immediately reacquired the asset or liability for consideration of the same amount.

(3) Condition A is that if subsection (2) applied a credit would be brought into account for the purposes of this Part by the transferee because of subsection (2)(a) and (b).

(4) Condition B is that—

(a) the relevant loan relationship is a creditor relationship,

(b) the transferee has a hedging relationship between a derivative contract and the creditor relationship, and

(c) because of section 632(2)(a) and (b) (transferee leaving group because of exempt distribution) a credit is to be brought into account by the transferee for the purposes of Part 7 (derivative contracts) in respect of the derivative contract.

(5) Section 707 (meaning of “hedging relationship”) applies for the purposes of this section.

Textual Amendments

F1 Words in s. 346(1)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 607(a) (with Sch. 2)

F2 Words in s. 346(1)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 607(b) (with Sch. 2)