Finance Act 2005

67 Consequences of a chargeable event: exit event X or Y

(1) This section applies where a chargeable event occurs in relation to C by virtue of section 66 and the exit event in question is exit event X or Y.

(2) C is to be treated for corporation tax purposes as receiving, immediately before the exit event, an amount of income from the relevant trade equal to the chargeable amount.

(3) Where the exit event is exit event X, an amount equal to the chargeable amount is to be treated for corporation tax purposes as a loss of the relevant trade brought forward under section 393 of ICTA (relief of trading losses against future trading profits) to the exit accounting period.

(4) But that loss may only be set off against income which—

(a) derives directly from the rights to guaranteed income under the guaranteed income agreement, and

(b) is brought into account by C for the relevant trade after the exit event,

and, in particular, may not be set off against the income which C is treated as receiving under subsection (2) by virtue of the exit event.

(5) The “chargeable amount” is the value immediately before the exit event of the rights to guaranteed income under the guaranteed income agreement calculated in accordance with section 70.

(6) Any income received in, or losses brought forward to, an accounting period by virtue of this section are in addition to any other income received in, or losses brought forward to, that period.

(7) In this section “exit accounting period” means the accounting period of C in which the exit event occurs.

(8) This section is deemed to have come into force on 2nd December 2004.