Part 5Loan Relationships
Chapter 15Tax avoidance
Disposals for consideration not fully recognised by accounting practice
455Disposals for consideration not fully recognised by accounting practice
1
This section applies if in any accounting period (“the relevant accounting period”) a company with the relevant avoidance intention disposes of rights under a creditor relationship wholly or partly for consideration which—
a
is not wholly in the form of money or a debt which falls to be settled by the payment of money, and
b
is not fully recognised.
2
The relevant avoidance intention is the intention of eliminating or reducing the credits to be brought into account for the purposes of this Part.
3
Consideration is not fully recognised if, as a result of the application of generally accepted accounting practice, the full amount or value of the consideration is not recognised in determining the company’s profit or loss for the relevant accounting period or any other accounting period.
4
In determining the credits which the company must bring into account for the relevant accounting period for the purposes of this Part, it is assumed that the whole of the consideration is recognised in determining the company’s profit or loss for that period.
5
But this section does not apply if paragraph 1(2) of Schedule 28AA to ICTA (provision not at arm’s length) operates in relation to the disposal so as to increase the tax liability of the company.