SCHEDULES

SCHEDULE 9 Loan relationships: special computational provisions

Transactions not at arm’s length

C1C211

F41

Where—

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).

F31A

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.

F53

Sub-paragraph (1) above does not apply if the related transaction—

a

is a transaction as a result of which paragraph 12 below (groups)—

i

applies by virtue of sub-paragraph (1)(a) of it, or

ii

would so apply, apart from sub-paragraph (2A) of it (transferor using fair value accounting), or

b

is part of a series of transactions as a result of which that paragraph—

i

applies by virtue of sub-paragraph (1)(b) of it, or

ii

would so apply, apart from sub-paragraph (2A) of it.

F13A

Sub-paragraph (1) above shall not apply to any exchange gains or losses.

F24

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F65

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