[F1361BThe debt-for-debt exceptionU.K.
(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.]
Textual Amendments
F1Ss. 361A-361C inserted (with effect in accordance with Sch. 15 para. 3(2) of the amending Act) by Finance Act 2010 (c. 13), Sch. 15 para. 2(5) (with Sch. 15 para. 4)
Modifications etc. (not altering text)