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S.C.A.    Standing Committee Proceedings: 23rd May 2006            

264

 

Finance (N, continued

 
 

“85C  

Amounts not fully recognised for accounting purposes

 

(1)    

This section applies if—

 

(a)    

a company is, or is treated as being, a party to a creditor

 

relationship in any period,

 

(b)    

an amount is not fully recognised for the period in respect of

 

the creditor relationship,

 

(c)    

the company is, or is treated as being, a party to a debtor

 

relationship in the period or has at any time issued share

 

capital which falls to be treated for accounting purposes as a

 

liability (a “relevant accounting liability”) for the period,

 

(d)    

an amount is not fully recognised for the period in respect of

 

the debtor relationship or relevant accounting liability, and

 

(e)    

the amounts are not fully recognised as mentioned in

 

paragraphs (b) and (d) as a result of the application of

 

generally accepted accounting practice in relation to the

 

creditor relationship and the debtor relationship or relevant

 

accounting liability.

 

(2)    

For the purposes of subsection (1) an amount is not fully recognised

 

for the period in respect of any loan relationship or relevant accounting

 

liability of the company if—

 

(a)    

no amount in respect of the relationship or liability is

 

recognised in determining its profit or loss for the period, or

 

(b)    

an amount in respect of only part of the relationship or liability

 

is recognised in determining its profit or loss for the period.

 

(3)    

In determining the credits and debits to be brought into account by the

 

company in respect of the creditor relationship for the period for the

 

purposes of this Chapter, the applicable assumption (see subsection

 

(6)) must be made.

 

(4)    

In any case where the condition in subsection (1)(c) is met by

 

reference to a debtor relationship of the company, in determining the

 

credits and debits to be brought into account by the company in respect

 

of that relationship for the period for the purposes of this Chapter, the

 

applicable assumption must be made.

 

(5)    

But the amount of any debits to be brought into account by the

 

company for any period for the purposes of this Chapter as a result of

 

subsection (4) must not exceed the amount of any credits to be brought

 

into account by the company for the period as a result of subsection

 

(3).

 

(6)    

For the purposes of this section, in relation to any loan relationship, the

 

applicable assumption is the assumption that an amount in respect of

 

the whole of the relationship is recognised in determining the

 

company’s profit or loss for the period.

 

(7)    

In any case where—

 

(a)    

apart from this section any credits or debits are brought into

 

account by the company in respect of any loan relationship for

 

the period for the purposes of this Chapter, and

 

(b)    

the relationship is one to which this section applies,


 
 

S.C.A.    Standing Committee Proceedings: 23rd May 2006            

265

 

Finance (N, continued

 
 

    

the credits and debits to be so brought into account as a result of this

 

section must be determined on the same basis of accounting on which

 

the credits or debits mentioned in paragraph (a) were determined.

 

(8)    

In any other case, the credits and debits to be so brought into account

 

as a result of this section must be determined on the amortised cost

 

basis of accounting.”.’.

 

Dawn Primarolo

 

Agreed to  67

 

Schedule  6,  page  187,  line  42  [Vol  I],  leave out ‘relevant’.

 

Dawn Primarolo

 

Agreed to  68

 

Schedule  6,  page  188  [Vol  I],  leave out lines 6 and 7.

 

Dawn Primarolo

 

Agreed to  69

 

Schedule  6,  page  188,  line  18  [Vol  I],  at end insert—

 

  ‘(5A)  

The amendments made by sub-paragraphs (2) and (3) have effect in relation to

 

any share held by a company on or after 12th May 2006 in any case where—

 

(a)    

the share is redeemable for the purposes of section 91D of FA 1996 as

 

a result of any arrangements mentioned in subsection (2)(b) of that

 

section (as substituted by sub-paragraph (2)), and

 

(b)    

the arrangements were entered into after the company acquired the

 

share.

 

    (5B)  

But in that case, in relation to an accounting period beginning before 12th May

 

2006, amounts are to be brought into account for the purposes of Chapter 2 of

 

Part 4 of FA 1996 as a result of those amendments only if the amounts relate

 

to any time on or after that date.’.

 

Dawn Primarolo

 

Agreed to  70

 

Schedule  6,  page  188,  line  19  [Vol  I],  at beginning insert ‘In any other case,’.

 

Schedule, as amended, Agreed to.

 

Clauses 77 to 79 Agreed to.

 


 

Dawn Primarolo

 

Agreed to  73

 

Schedule  7,  page  196,  line  31  [Vol I],  leave out ‘the transfer and any associated

 

operations’ and insert ‘such of the relevant transactions as were’.

 

Dawn Primarolo

 

Agreed to  74

 

Schedule  7,  page  196,  line  42  [Vol I],  leave out from first ‘to’ to second ‘the’ in

 

line 43 and insert ‘relevant transactions by reference to which’.


 
 

S.C.A.    Standing Committee Proceedings: 23rd May 2006            

266

 

Finance (N, continued

 
 

Dawn Primarolo

 

Agreed to  75

 

Schedule  7,  page  197,  line  1  [Vol I],  leave out ‘other associated operations’ and

 

insert ‘associated operations not falling within paragraph (a) above’.

 

Dawn Primarolo

 

Agreed to  76

 

Schedule  7,  page  197,  line  32  [Vol I],  at end insert—

 

‘ “relevant transactions” means—

 

(a)    

the transfer, and

 

(b)    

any associated operations.’.

 

Schedule, as amended, Agreed to.

 

Clause 80 Agreed to.

 


 

Further consideration adjourned—(Mr Andy Reid.)

 

[Adjourned till Thursday at 9.05 a.m.


 
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