The Mutual Societies (Transfers of Business) (Tax) Regulations 2009

Transfer of loan relationship

19.—(1) Subject to paragraph (7), this regulation applies if—

(a) there is a relevant transfer by an industrial and provident society; and

(b) as a result of that transfer, the transferee directly or indirectly replaces the transferor as a party to a loan relationship (as to which see regulation 20).

(2) The credits and debits to be brought into account for the purposes of Parts 3, 5 and 6 of CTA as a result of the relevant transfer shall be determined in accordance with paragraphs (3) to (10).

(3) Subject to paragraph (5), for the accounting period in which the relevant transfer takes place, the transferor shall be treated as having entered into the relevant transfer for consideration of an amount equal to the notional carrying value of the asset or liability representing the loan relationship at the time of the relevant transfer.

(4) For any accounting period in which the transferee is a party to the loan relationship, the transferee shall be treated as if it had acquired the asset or liability representing the loan relationship for consideration of an amount equal to the notional carrying value of the asset or liability in the accounts of the transferor at the time of the relevant transfer.

(5) If a discount arises in respect of the relevant transfer, the consideration referred to in paragraph (3) shall be treated as increased by the amount of that discount.

(6) Schedule 28AA to ICTA (provision not at arm’s length)(1) does not apply in relation to the amounts in respect of which credits or debits are to be brought into account under this regulation.

(7) This regulation does not apply where the transferor is regarded as using fair value accounting in respect of the loan relationship (as to which see regulation 21).

(8) The transferor shall be regarded for the purposes of this Part as using fair value accounting in respect of a loan relationship only if the credits and debits to be brought into account for the purposes of these Regulations as respects the relationship are determined on that basis.

(9) It does not matter for the purposes of paragraph (8) if the transferor does not otherwise use fair value accounting in respect of the loan relationship.

(10) For the purposes of this regulation, subsection (5) of section 480 of CTA (relevant non-lending relationships involving discounts) applies as it applies for the purposes of that section.

(11) This regulation is subject to—

(a) section 332 of CTA (repo, stock lending and other transactions); and

(b) regulation 26.

(1)

1988 c. 1. Schedule 28AA was inserted by Schedule 16 to the Finance Act 1998 (c. 36).