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 6 U.K. Connected companies relationships: impairment losses and releases of debts

Modifications etc. (not altering text)

C3 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 U.K.

362 Parties becoming connected where creditor's rights subject to impairment adjustment U.K.

(1) This section applies if—

(a) a company (“D”) is a party to a loan relationship as debtor,

(b) another company (“C”) which—

(i) is a party to the loan relationship as creditor, and

(ii) is not connected with D,

becomes connected with D, and

(c) the pre-connection carrying value would have been adjusted for impairment if a period of account had ended immediately before the companies became connected.

(2) C is treated as releasing its rights under the loan relationship when C and D become connected.

(3) The amount treated as released is the amount of the impairment adjustment referred to in subsection (1)(c).

(4) In subsection (1)(c) “the pre-connection carrying value” means the amount that would be the carrying value of the asset representing the loan relationship in C's accounts if a period of account had ended immediately before the companies became connected.

(5) For the purposes of subsection (4) the carrying value is determined taking no account of—

(a) accrued amounts,

(b) amounts paid or received in advance, or

(c) impairment losses.