Valid from 01/04/2009
(1)This section applies if—
(a)a company ceases to be a party to a loan relationship in an accounting period (“the cessation period”),
(b)profits or losses arise to the company from the loan relationship in that period, and
(c)the credits or debits brought into account for the purposes of this Part for that period do not include credits or debits representing the whole of those profits or losses.
(2)Credits or debits in respect of so much of those profits or losses as are not represented by credits or debits brought into account for the cessation period must continue to be brought into account under this Part over one or more subsequent accounting periods (“post-cessation periods”) as in the case of a loan relationship to which the company is a party in those periods.
(3)Subsection (4) applies if any question arises how far in a post-cessation period—
(a)the company is a party to the loan relationship—
(i)for the purposes of a trade it carries on, or
(ii)for any other particular purpose or purposes, or
(b)the loan relationship is referable to a particular business the company carries on or a particular description of such business.
(4)The question is to be determined by reference to the circumstances immediately before the company ceased to be a party to the loan relationship, instead of the circumstances in the post-cessation period.
(5)Subsection (6) applies if any question arises—
(a)how far the loan relationship has a particular purpose in a post-cessation period, or
(b)whether there is a connection between the company and any other person for a post-cessation period for the purposes of this Part.
(6)The question is to be determined by reference to the circumstances in the cessation period instead of the circumstances in the post-cessation period.