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| | “85C | Amounts not fully recognised for accounting purposes |
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| | (1) | This section applies if— |
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| | (a) | a company is, or is treated as being, a party to a creditor |
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| | relationship in any period, |
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| | (b) | an amount is not fully recognised for the period in respect of |
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| | the creditor relationship, |
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| | (c) | the company is, or is treated as being, a party to a debtor |
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| | relationship in the period or has at any time issued share |
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| | capital which falls to be treated for accounting purposes as a |
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| | liability (a “relevant accounting liability”) for the period, |
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| | (d) | an amount is not fully recognised for the period in respect of |
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| | the debtor relationship or relevant accounting liability, and |
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| | (e) | the amounts are not fully recognised as mentioned in |
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| | paragraphs (b) and (d) as a result of the application of |
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| | generally accepted accounting practice in relation to the |
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| | creditor relationship and the debtor relationship or relevant |
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| | (2) | For the purposes of subsection (1) an amount is not fully recognised |
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| | for the period in respect of any loan relationship or relevant accounting |
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| | liability of the company if— |
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| | (a) | no amount in respect of the relationship or liability is |
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| | recognised in determining its profit or loss for the period, or |
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| | (b) | an amount in respect of only part of the relationship or liability |
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| | is recognised in determining its profit or loss for the period. |
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| | (3) | In determining the credits and debits to be brought into account by the |
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| | company in respect of the creditor relationship for the period for the |
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| | purposes of this Chapter, the applicable assumption (see subsection |
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| | (4) | In any case where the condition in subsection (1)(c) is met by |
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| | reference to a debtor relationship of the company, in determining the |
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| | credits and debits to be brought into account by the company in respect |
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| | of that relationship for the period for the purposes of this Chapter, the |
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| | applicable assumption must be made. |
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| | (5) | But the amount of any debits to be brought into account by the |
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| | company for any period for the purposes of this Chapter as a result of |
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| | subsection (4) must not exceed the amount of any credits to be brought |
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| | into account by the company for the period as a result of subsection |
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| | (6) | For the purposes of this section, in relation to any loan relationship, the |
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| | applicable assumption is the assumption that an amount in respect of |
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| | the whole of the relationship is recognised in determining the |
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| | company’s profit or loss for the period. |
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| | (a) | apart from this section any credits or debits are brought into |
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| | account by the company in respect of any loan relationship for |
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| | the period for the purposes of this Chapter, and |
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| | (b) | the relationship is one to which this section applies, |
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| | | the credits and debits to be so brought into account as a result of this |
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| | section must be determined on the same basis of accounting on which |
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| | the credits or debits mentioned in paragraph (a) were determined. |
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| | (8) | In any other case, the credits and debits to be so brought into account |
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| | as a result of this section must be determined on the amortised cost |
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| Schedule 6, page 187, line 42 [Vol I], leave out ‘relevant’. |
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| Schedule 6, page 188 [Vol I], leave out lines 6 and 7. |
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| Schedule 6, page 188, line 18 [Vol I], at end insert— |
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| | ‘(5A) | The amendments made by sub-paragraphs (2) and (3) have effect in relation to |
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| | any share held by a company on or after 12th May 2006 in any case where— |
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| | (a) | the share is redeemable for the purposes of section 91D of FA 1996 as |
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| | a result of any arrangements mentioned in subsection (2)(b) of that |
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| | section (as substituted by sub-paragraph (2)), and |
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| | (b) | the arrangements were entered into after the company acquired the |
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| | (5B) | But in that case, in relation to an accounting period beginning before 12th May |
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| | 2006, amounts are to be brought into account for the purposes of Chapter 2 of |
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| | Part 4 of FA 1996 as a result of those amendments only if the amounts relate |
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| | to any time on or after that date.’. |
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| Schedule 6, page 188, line 19 [Vol I], at beginning insert ‘In any other case,’. |
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| | Schedule, as amended, Agreed to. |
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| | Clauses 77 to 79 Agreed to. |
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| Schedule 7, page 196, line 31 [Vol I], leave out ‘the transfer and any associated |
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| operations’ and insert ‘such of the relevant transactions as were’. |
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| Schedule 7, page 196, line 42 [Vol I], leave out from first ‘to’ to second ‘the’ in |
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| line 43 and insert ‘relevant transactions by reference to which’. |
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| Schedule 7, page 197, line 1 [Vol I], leave out ‘other associated operations’ and |
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| insert ‘associated operations not falling within paragraph (a) above’. |
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| Schedule 7, page 197, line 32 [Vol I], at end insert— |
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| | ‘ “relevant transactions” means— |
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| | (b) | any associated operations.’. |
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| | Schedule, as amended, Agreed to. |
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| Further consideration adjourned—(Mr Andy Reid.) |
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| [Adjourned till Thursday at 9.05 a.m. |
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