Part 14Change in company ownership

Chapter 4Company with investment business: restrictions on relief: asset transferred within group

Restrictions on relief

696Restriction on debits to be brought into account

1

This section has effect for the purpose of restricting the debits to be brought into account for the purposes of Part 5 of CTA 2009 (loan relationships) in respect of the company's loan relationships.

2

But this section applies only if, in accordance with the relevant provisions and section 702, an amount is included in respect of chargeable gains or, as the case may be, non-trading chargeable realisation gains in the total profits of the accounting period of the company in which the relevant gain accrues or arises.

3

The debits to be brought into account for the purposes of Part 5 of CTA 2009 for—

a

the accounting period beginning immediately after the change in ownership, or

b

any subsequent accounting period,

do not include relevant non-trading debits so far as the amount of those debits exceeds the modified total profits of the accounting period.

4

In subsection (3) “the modified total profits of the accounting period” means the total profits of that period—

a

less, if that period is the period in which the relevant gain accrues or arises, an amount equal to so much of those profits as represents the relevant gain, and

b

after deducting any amounts which can be relieved against the profits, other than an amount falling to be deducted under section 461 of CTA 2009 (claim to set off deficit against other profits for the deficit period).

5

If, as a result of subsection (3), a debit is to any extent not brought into account for an accounting period, that debit may (to that extent) be brought into account for the next accounting period, but this is subject to the application of subsections (3) and (4) to that next accounting period.

6

For the meaning of “relevant non-trading debit”, see section 730.