346Transferee leaving group because of exempt distribution
(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 as a result of—
(i)section 213(2) of ICTA (exempt distributions), or
(ii)section 213A of that Act (exempt distributions: division of business), and
(b)there is a chargeable payment within the meaning of section 214(2) of that Act (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.