C1C2C3C4C5C6C7C9C8C10Part 5Loan Relationships

Annotations:
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)

C3

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)

C5

Pt. 5 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)

C7

Pt. 5 modified (with effect in accordance with reg. 1(2)(3) of the amending S.I.) by The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209), regs. 1(1), 11(3)-(6)

C9

Pt. 5 modified by 2010 c. 4, s. 356NC(1)-(4) (as inserted (1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6)

C8

Pt. 5 modified by 2010 c. 4, s. 356NB(1)-(4) (as inserted (1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6)

C10

Pt. 5 modified by 2007 c. 3, s. 809FZZ(9) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))

C10Chapter 15Tax avoidance

Transactions not at arm's length: exchange gains and losses

447C10Exchange gains and losses on debtor relationships: loans disregarded under F4Part 4 of TIOPA 2010

1

Subsections (2) and (3) apply if—

a

a company has a debtor relationship in an accounting period,

b

an exchange gain or loss arises in the period in respect of a liability representing the relationship, and

c

as a result of F1section 147(3) or (5) of TIOPA 2010 (provision not at arm's length) the profits and losses of the company are calculated for tax purposes for the period as if—

i

the loan had not been made, or

ii

part of the loan had not been made.

2

In a case where subsection (1)(c)(i) applies, the exchange gain or loss must be be left out of account in determining the credits or debits to be brought into account for the purposes of this Part.

3

In a case where subsection (1)(c)(ii) applies, a proportion of the exchange gain or loss must be left out of account in determining those credits or debits.

4

That proportion is the proportion that the part of the loan that is treated as if it had not been made bears to the whole of the loan.

F54A

If the debtor relationship is to any extent matched, subsections (2) and (3) apply to leave out of account only the lesser of—

a

the amount of the exchange gain or loss (in the case of subsection (2)) or the proportion of the exchange gain or loss (in the case of subsection (3)) which would be left out of account apart from this subsection, and

b

the amount of the exchange gain or loss arising in respect of a liability representing the debtor relationship to the extent that the debtor relationship is unmatched (an amount which may be nil).

5

Nothing in F2Part 4 of TIOPA 2010 requires the amounts brought into account under this Part in respect of exchange gains or losses from loan relationships to be calculated on the assumption that the arm's length provision had been made instead of the actual provision.

6

But subsection (5) does not affect the application of subsections (2) and (3) under subsection (1).

7

In this section “the arm's length provision” and “the actual provision” have the same meaning as in F3Part 4 of TIOPA 2010 (see sections 149 and 151 of that Act).