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Version Superseded: 12/02/2019
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(1)This section applies for the purposes of section 330.
(2)“Financing costs” means the costs of debt finance.
(3)In calculating the costs of debt finance for an accounting period the matters to be taken into account include—
(a)any costs giving rise to debits in respect of debtor relationships of the company under Part 5 of CTA 2009 (loan relationships), other than debits in respect of exchange losses from such relationships,
(b)any exchange gain or loss from a debtor relationship of the company in relation to debt finance,
(c)any credit or debit falling to be brought into account in accordance with Part 7 of CTA 2009 (derivative contracts) in relation to debt finance,
(d)the financing cost implicit in a payment under a finance lease,
(e)if the company is the lessee under a long funding operating lease, the amount deductible in respect of payments under the lease in calculating the profits of the lessee for corporation tax purposes (after first making against any such amount any reductions falling to be made as a result of section 379 (lessee under long funding operating lease)), and,
(f)any other costs arising from what would be considered in accordance with generally accepted accounting practice to be a financing transaction.
(4)If an amount representing the whole or part of a payment falling to be made by a company—
(a)falls (or would fall) to be treated as a finance charge under a finance lease for the purposes of accounts which relate to that company and one or more other companies and are prepared in accordance with generally accepted accounting practice, but
(b)is not so treated in the accounts of the company,
the amount is to be treated as a financing cost within subsection (3)(d).
(5)If—
(a)in calculating the adjusted ring fence profits of a company for an accounting period, an amount falls to be left out of account as a result of subsection (3)(d), but
(b)the whole or any part of that amount is repaid,
the repayment is also to be left out of account in calculating the adjusted ring fence profits of the company for any accounting period.
(6)In this section “finance lease” means any arrangements which—
(a)provide for an asset to be leased or otherwise made available by a person to another person (“the lessee”), and
(b)under generally accepted accounting practice—
(i)fall (or would fall) to be treated, in the accounts of the lessee or a person connected with the lessee, as a finance lease or a loan, or
(ii)are comprised in arrangements which fall (or would fall) to be so treated.
(7)For the purposes of applying subsection (6)(b), the lessee and any person connected with the lessee are to be treated as being companies which are incorporated in a part of the United Kingdom.
(8)Section 1176(1) (meaning of “connected” persons) does not apply for the purposes of this section.
(9)In this section—
“accounts”, in relation to a company, includes accounts which—
relate to two or more companies of which that company is one, and
are drawn up in accordance with generally accepted accounting practice,
“debtor relationship” has the meaning given by section 302(6) of CTA 2009,
“exchange gains” and “exchange losses” are to be read in accordance with section 475 of CTA 2009, and
“long funding operating lease” means a long funding operating lease for the purposes of Part 2 of CAA 2001 (see section 70YI(1) of that Act).
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