Corporation Tax Act 2009 (c. 4)

Part 5 U.K. Loan Relationships

Modifications etc. (not altering text)

C1 Pt. 5 applied (with effect in accordance with Sch. 24 paras. 13-16 of the amending Act) by Finance Act 2009 (c. 10), Sch. 24 para. 15(2)(3)

C2 Pt. 5 applied (with modifications) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 990(5), 1184(1) (with Sch. 2)

Chapter 5 U.K. Connected companies relationships: introduction and general

351 Companies ceasing to be connected U.K.

(1) This section applies if—

(a) a company's loan relationship ceases to be a connected companies relationship, and

(b) as a result of section 349 ceasing to apply the company—

(i) brings into account credits or debits determined in accordance with an amortised cost basis of accounting for one accounting period (“the earlier period”), and

(ii) brings into account credits or debits determined in accordance with a fair value basis of accounting for the next accounting period (“the later period”).

(2) If—

(a) the fair value of a relevant asset at the end of the earlier period (“FVA”), exceeds

(b) the cost of the asset which would be given at that time on an amortised cost basis of accounting (“ACA”),

the excess must be brought into account for the later period as a credit for the purposes of this Part.

(3) If ACA exceeds FVA, the excess must be brought into account for the later period as a debit for the purposes of this Part.

(4) If—

(a) the fair value of a relevant liability at the end of the earlier period (“FVL”), exceeds

(b) the cost of the liability which would be given at that time on an amortised cost basis of accounting (“ACL”),

the excess must be brought into account for the later period as a debit for the purposes of this Part.

(5) If ACL exceeds FVL, the excess must be brought into account for the later period as a credit for the purposes of this Part.