F1Relevant value4A

1

For the purposes of regulations 3(7) and 4(5), “relevant value” means—

a

in relation to shares held by the company in another company (“Company A”), where the company elects, the higher of—

i

the net asset value underlying the shares in Company A, and

ii

the value shown in the accounts of the company; and

b

in any other case, the value shown in the accounts of the company.

2

In paragraph (1)(a)(i) the net asset value underlying the shares in Company A is an amount equal to—

a

the value of the assets, less

b

the value of the liabilities

of Company A and any direct or indirect subsidiary of Company A denominated in the relevant currency.

This is subject to paragraph (6).

3

The value of assets and liabilities referred to in paragraph (2) is the value at the relevant time shown in—

a

a balance sheet of Company A, or

b

where Company A has a direct or indirect subsidiary, a notional consolidated balance sheet of Company A prepared in the relevant currency.

4

For the purposes of paragraph (3) in determining whether an asset or liability would be recognised in the balance sheet or notional consolidated balance sheet and, if so recognised the value that would be accorded to it, regard shall be had to the accounting treatment of the asset or liability—

a

in any consolidated accounts prepared by the company, or

b

where the company does not prepare consolidated accounts, in any consolidated accounts prepared by a company that directly or indirectly controls the company.

5

Nothing in paragraphs (3) or (4) shall prevent an asset or liability, which might be eliminated in the preparation of any consolidated accounts, from being taken into account in paragraph (2).

6

If the company does not directly hold the entire issued share capital in Company A, the net asset value underlying the shares in Company A shall be reduced by such amount as is just and reasonable having regard to—

a

the proportion of the issued shares held by the company, and

b

where there is more than one class of share, the rights attached to the shares held by the company.

F47

An election under paragraph (1)—

a

must be made by the company by notice in writing to an officer of Revenue and Customs, and

b

must specify the review period.

7A

An election—

a

applies to all the shareholdings held by the company which are matched in accordance with regulation 3(3)(b) or 4(3)(b), and

b

has effect from a date specified in the notice which must be later than the date the notice is given.

7B

An election may be amended or revoked by notice in writing to an officer of Revenue and Customs—

a

before the election has effect, or

b

with effect from a date specified in the notice which must be—

i

later than the date the notice is given, and

ii

at least 12 months after the election was made.

7C

Where the date specified in a notice under paragraph (7) or (7B) is not the first day of an accounting period so much of the period as falls before that date and so much of the period as falls on or after that date are treated as separate accounting periods.

F58

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F58A

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F58B

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F29

In this regulation—

  • “relevant currency” means the currency which, as a result of exchange rate fluctuations, gives rise to the economic risk referred to in regulations 3(3) and 4(3);

  • “control” has the meaning given in F3section 1124 of CTA 2010.