Transfer of loan relationship or derivative contract – further provisions
25.—(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.