Corporation Tax Act 2009

655 Ceasing to be party to debtor relationship when deemed option not exercised

(1) Subsection (2) applies if the company ceases to be a party to the debtor relationship mentioned in section 652(2) at a time when the option mentioned in section 652(3) has not been exercised.

(2) The company is treated for the purposes of corporation tax on chargeable gains—

(a) as having acquired an asset for consideration of an amount equal to Y, and

(b) as having disposed of that asset for consideration of an amount equal to CV.

(3) In this section—

• “CV” has the same meaning as in section 654,

• “Y” means—

  (a)

  if the company ceases to be a party to the debtor relationship as a result of the redemption or repayment of the liability representing that relationship, the amount paid by the company, or

  (b)

  otherwise, the consideration given by the company on its ceasing to be a party to that relationship,

  in either case reduced (but not below nil) by the fair value of the host contract at the date on which it so ceases, and

• “the host contract” has the same meaning as in section 654.