Part 6Relationships treated as loan relationships etc

Chapter 2Relevant non-lending relationships

Meaning of “money debt” and “interest” in this Chapter

483Exchange gains and losses: amounts treated as money debts

(1)

This section applies for the purposes of this Chapter so far as relating to exchange gains and losses.

(2)

Any currency held by a company is treated as a money debt owed to the company.

(3)

A provision made by a company for the purposes of its statutory accounts in respect of a liability to which the company may become subject is treated as a money debt owed by the company if it meets conditions A and B.

(4)

Condition A is that if the company became subject to the liability, the duty to settle it would be owed for the purposes of—

(a)

a trade,

(b)

a UK property business, or

(c)

an overseas property business.

(5)

Condition B is that the provision falls to be taken into account (apart from Part 5) in calculating the profits or losses of the trade, UK property business or overseas property business for corporation tax purposes.

(6)

In the case of a company carrying on insurance business—

(a)

any deferred acquisition costs are treated as a money debt owed to the company, and

(b)

any provision made by the company for unearned premiums or for unexpired risks is treated as a money debt owed by the company.

(7)

In subsection (6)—

(a)

“deferred acquisition costs” has the meaning given in Assets item G.II in the Balance Sheet Format set out after paragraph 10 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410), as read with note (17) of the Notes on the Balance Sheet Format (which immediately follow that Format),

(b)

“provision made by the company for unearned premiums” has the meaning given in Liabilities item C.1 in that Balance Sheet Format, as read with notes (12) and (20) of those Notes, and

(c)

“provision for unexpired risks” has the meaning given in paragraph 91 of that Schedule.

(8)

This section is subject to section 486 (exclusion of exchange gains and losses in respect of tax debts etc).

484Provision not at arm's length: meaning of “interest” and “money debt”

(1)

References in this Chapter to interest payable on a money debt include a reference to any amount which because of F1Part 4 of TIOPA 2010 (provision not at arm's length) falls to be treated as—

(a)

interest on a money debt, or

(b)

interest on an amount (“the notional debt”) which is treated as a money debt.

(2)

Accordingly, references in this Chapter to a money debt include references to the notional debt.