Part 5 Loan Relationships

Chapter 6 Connected companies relationships: impairment losses and releases of debts

Exclusion of credits for connected companies debts on release or reversal of impairments

359 Exclusion of credits on release of connected companies debts during creditor’s insolvency

(1) This section applies if—

(a) a liability to pay an amount under a company’s debtor relationship is released,

(b) the release takes place in an accounting period for which an amortised cost basis of accounting is used in respect of that relationship,

(c) condition A, B, C, D or E in section 357 is met in relation to the company releasing the amount,

(d) immediately before the time when the condition in question was first met the relationship was a connected companies relationship, and

(e) immediately after that time it was not such a relationship.

(2) The company is not required to bring into account a credit in respect of the release for the purposes of this Part.