PART 3INDUSTRIAL AND PROVIDENT SOCIETIES

Transfer of loan relationship or derivative contract – further provisions25

1

This regulation applies if—

a

there is a relevant transfer within regulation 3(2)(a), (b), (d), (e) or (f); and

b

before the date of the relevant transfer there had been a transfer to a company of—

i

a loan relationship to which section 336 of CTA (transfers of loans on group transactions) applied; or

ii

a derivative contract to which section 625 of CTA (group member replacing another as party to derivative contract) applied,

but this is subject to paragraph (6).

2

Paragraph (3) applies if as a result of the relevant transfer the company referred to in paragraph (1)(b) ceases to be a member of the same group as the transferor—

a

before the end of the relevant six year period referred to in—

i

section 344(4) of CTA (transferee leaving group after replacing transferor as party to loan relationship); or

ii

section 630(4) of CTA (introduction to sections 631 and 632); and

b

whilst still a party to the relevant loan relationship or derivative contract.

3

If paragraph (2) is satisfied—

a

the company referred to in paragraph (1)(b) shall be treated as not having ceased to be a member of the same group as the transferor;

b

in the case of a loan relationship, section 345 of CTA (transferee leaving group otherwise than because of exempt distribution) shall not apply to the loan relationship as a result of the relevant transfer; and

c

in the case of a derivative contract, section 631 of CTA (transferee leaving group otherwise than because of exempt distribution) shall not apply to the derivative contract as a result of the relevant transfer.

4

Paragraph (5) applies if the company referred to in paragraph (1)(b) ceases to be a member of the same group as the transferee—

a

before the end of the relevant six year period referred to in—

i

section 344(4) of CTA (transferee leaving group after replacing transferor as party to loan relationship); or

ii

section 630(4) of CTA (introduction to sections 631 and 632); and

b

whilst still a party to the relevant loan relationship or derivative contract.

5

If paragraph (4) is satisfied—

a

in the case of a loan relationship, section 345 of CTA (transferee leaving group otherwise than because of exempt distribution) shall apply to the loan relationship as a result of the relevant transfer; and

b

in the case of a derivative contract, section 631 of CTA (transferee leaving group otherwise than because of exempt distribution) shall apply to the derivative contract as a result of the relevant transfer.

6

This regulation does not apply where the transferor of a loan relationship is regarded as using fair value accounting in respect of that loan relationship.

7

The transferor shall be regarded for the purposes of this Part as using fair value accounting in respect of a loan relationship only if the credits and debits to be brought into account for the purposes of these Regulations as respects that loan relationship are determined on that basis.

8

It does not matter for the purposes of paragraph (7) if the transferor does not otherwise use fair value accounting in respect of the loan relationship.

9

This regulation is subject to—

a

regulation 26 if there has been a transfer of a loan relationship to which section 336 of CTA (transfers of loans on group transactions) applied; or

b

regulation 27 if there has been a transfer of a derivative contract to which section 625 of CTA (group member replacing another as party to a derivative contract) applied.