C1C3C4C5C6Part 5Loan Relationships
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)
Pt. 5 modified (15.11.2011 for specified purposes, 30.3.2012 for E.W.) by Localism Act 2011 (c. 20), ss., 240(5)(o), Sch. 24 para. 5; S.I. 2012/628, art. 3(b)
Pt. 5 modified (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 2; S.I. 2011/2576, art. 5
C2C3C6Chapter 6Connected companies relationships: impairment losses and releases of debts
Pt. 5 Chs. 6-8 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)
Deemed debt releases on impaired debts becoming held by connected company
361BC6F1The debt-for-debt exception
1
For the purposes of section 361, the “debt-for-debt exception” applies if condition 1 or 2 is met.
2
Condition 1 is that—
a
the acquisition is an arm's length transaction,
b
the rights that are acquired are rights under a loan relationship that is represented by a security (“the old security”),
c
the consideration given by C for the acquisition consists only of a security (“the new security”) representing a loan relationship to which C is a party as debtor, and
d
the new security—
i
has the same nominal value as the old security, and
ii
at the time of the acquisition, has substantially the same market value as the old security.
3
Condition 2 is that—
a
the acquisition is an arm's length transaction,
b
the rights that are acquired are rights under a loan relationship that is represented by an asset other than a security (“the old unsecured loan”),
c
the consideration given by C for the acquisition consists only of an asset other than a security (“the new unsecured loan”) representing a loan relationship to which C is a party as debtor, and
d
the amount of the new unsecured loan, and its terms, are substantially the same as those of the old unsecured loan.
4
In this section “market value” has the same meaning as in TCGA 1992 (see sections 272 and 273 of that Act).
5
In determining for the purposes of this section the market value of a security in a case in which the security represents a loan relationship to which section 415 (loan relationships with embedded derivatives) applies, rights or liabilities within subsection (1)(b) of that section are to be treated as comprised in the loan relationship.
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)