Part 5Loan Relationships
Chapter 15Tax avoidance
Transactions not at arm's length: exchange gains and losses
452Exchange gains and losses where loan not on arm's length terms
(1)
This subsection applies if—
(a)
a company would be treated as having a debtor relationship in an accounting period if a claim were made under F1section 192(1) of TIOPA 2010 in relation to that period, and
(b)
for that period there is a connection between that company and the company that would have the corresponding creditor relationship.
(2)
If subsection (1) applies, it is assumed that such a claim is made for the purpose of determining the debits or credits to be brought into account for the purposes of this Part in respect of any exchange gains or losses arising in that period in respect of the liability representing that debtor relationship.
F2(3)
Subsections (4) and (5) apply if, because of a claim made under section 192(1) of TIOPA 2010, or because of the claim that is assumed to be made under subsection (2)—
(a)
one company is treated for any purpose as having a debtor relationship, or
(b)
more than one company is treated for any purpose as having a debtor relationship represented by the same liability.
(4)
The total amount of the credits brought into account for the purposes of this Part in respect of exchange gains F3from that debtor relationship (in a subsection (3)(a) case) or from those debtor relationships F4(in a subsection (3)(b) case) must not exceed the total amount of the F5exchange gains or the proportion of the exchange gains to be left out of account under section 447 by the issuing company in respect of the loan relationship.
(5)
The total amount of the debits brought into account for those purposes in respect of exchange losses F6from that debtor relationship (in a subsection (3)(a) case) or from those debtor relationships F7(in a subsection (3)(b) case) must not exceed the total amount of the F8exchange losses or the proportion of the exchange losses to be left out of account under section 447 by the issuing company in respect of the loan relationship.
F9(5A)
In this section “issuing company” is to be construed in accordance with section 191(1)(a) of TIOPA 2010.
(6)
Section 466 (companies connected for an accounting period) applies for the purposes of this section.