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336 | Transfers of loans on group transactions |
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(1) | The case referred to in section 335(1)(a) is where— |
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(a) | there is a transaction within subsection (2) or a series of transactions |
| |
within subsection (3), and |
| |
(b) | as a result one of the companies involved (“the transferee”) directly or |
| 5 |
indirectly replaces the other (“the transferor”) as a party to a loan |
| |
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(2) | A transaction is within this subsection if it is a related transaction between two |
| |
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(a) | members of the same group, and |
| 10 |
(b) | within the charge to corporation tax in respect of that transaction. |
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(3) | A series of transactions is within this subsection if it is a series having the same |
| |
effect as a related transaction between two companies each of which— |
| |
(a) | has been a member of the same group at any time in the course of that |
| |
| 15 |
(b) | would be within the charge to corporation tax in respect of such a |
| |
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(4) | This Chapter does not apply as a result of this section in relation to— |
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(a) | a transfer of an asset, or |
| |
(b) | a transfer of rights under, or an interest in, an asset, |
| 20 |
| as a result of a transaction within subsection (2) or a series of transactions |
| |
within subsection (3) if immediately before or after the transfer the asset is |
| |
within one of the categories set out in section 440(4)(a), (d) and (e) of ICTA |
| |
(assets held for certain categories of long-term business). |
| |
(5) | In this Chapter, in relation to a case within subsection (1), “the transferee” and |
| 25 |
“the transferor” have the same meaning as in that subsection. |
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337 | Transfers of loans on insurance business transfers |
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(1) | The case referred to in section 335(1)(b) is where— |
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(a) | a transfer between two companies occurs to which this section applies, |
| |
| 30 |
(b) | as a result one of the companies (“the transferee”) directly or indirectly |
| |
replaces the other (“the transferor”) as a party to a loan relationship. |
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(2) | This section applies to the transfers specified in subsection (3), so far as they are |
| |
not excluded by subsection (4). |
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| 35 |
(a) | a transfer between two companies of business consisting of the |
| |
effecting or carrying out of contracts of long-term insurance which has |
| |
effect under an insurance business transfer scheme, and |
| |
(b) | any transfer between two companies which is a qualifying overseas |
| |
| 40 |
(4) | Subsection (3) does not apply to a transfer of an asset, or of rights under or an |
| |
interest in an asset, if the asset— |
| |
(a) | was within one of the categories set out in section 440(4) of ICTA |
| |
immediately before the transfer, and |
| |
(b) | is not within that category immediately after it. |
| 45 |
|
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|
| |
|
(5) | Subsection (6) applies for the purposes of subsection (4) if one of the companies |
| |
mentioned in subsection (3) is an overseas life insurance company. |
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(6) | An asset is taken as being in the same category both immediately before and |
| |
immediately after a transfer if the asset— |
| |
(a) | was in one category immediately before the transfer, and |
| 5 |
(b) | is within the corresponding category immediately after it. |
| |
(7) | In this Chapter, in relation to a case within subsection (1), “the transferee” and |
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“the transferor” have the same meaning as in that subsection. |
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338 | Meaning of company replacing another as party to loan relationship |
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(1) | References in this Chapter to one company (“A”) replacing another company |
| 10 |
(“B”) as a party to a loan relationship include references to A becoming a party |
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to a loan relationship which— |
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(a) | confers rights within subsection (2), |
| |
(b) | imposes obligations within subsection (2), or |
| |
(c) | both confers such rights and imposes such obligations. |
| 15 |
(2) | Rights or obligations are within this subsection if they are equivalent to those |
| |
of B under a loan relationship to which B has previously ceased to be a party. |
| |
(3) | For the purposes of subsection (2), A’s rights under a creditor relationship are |
| |
equivalent to rights under another creditor relationship if each set of rights |
| |
gives the holder of an asset representing the relationship in question— |
| 20 |
(a) | the same rights against the same persons as to capital, interest and |
| |
| |
(b) | the same remedies to enforce those rights. |
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(4) | For the purposes of subsection (3), any difference in— |
| |
(a) | the total nominal amounts of the assets representing each relationship, |
| 25 |
(b) | the form in which they are held, or |
| |
(c) | the way in which they can be transferred, |
| |
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(5) | For the purposes of subsection (2), A’s obligations under a debtor relationship |
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are equivalent to obligations under another debtor relationship if each set of |
| 30 |
obligations subjects the holder of the liability representing the relationship in |
| |
| |
(a) | the same obligations to the same persons as to capital, interest and |
| |
| |
(b) | the same remedies to enforce those obligations. |
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(6) | For the purposes of subsection (5), any difference in— |
| |
(a) | the total nominal amounts of the assets representing the creditor |
| |
relationship corresponding to each relationship, |
| |
(b) | the form in which those assets are held, or |
| |
(c) | the way in which they can be transferred, |
| 40 |
| |
|
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|
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|
339 | Issues of new securities on certain cross-border reorganisations |
| |
(1) | The case referred to in section 335(1)(c) is where each of conditions A to D is |
| |
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(2) | Condition A is that sections 127 to 130 of TCGA 1992 (reorganisations: equation |
| |
of original shares and new holding)— |
| 5 |
(a) | apply in relation to an exchange as a result of section 135(3) of that Act |
| |
(which provides for sections 127 to 130 to apply to an exchange of |
| |
securities for those in another company as if it were a reorganisation), |
| |
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(b) | would so apply but for section 116(5) of that Act (which disapplies |
| 10 |
sections 127 to 130 where the original shares or the new holding consist |
| |
of or include a qualifying corporate bond). |
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(3) | Condition B is that the original shares consist of or include an asset |
| |
representing a loan relationship. |
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(4) | Condition C is that company A is resident in one member State and company |
| 15 |
B is resident in another member State. |
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(5) | For the purposes of this section a company is resident in a member State if— |
| |
(a) | it is within a charge to tax under the law of the State as being resident |
| |
| |
(b) | it is not regarded, for the purpose of any double taxation relief |
| 20 |
arrangements to which the State is a party, as resident in a territory not |
| |
| |
(6) | Condition D is that neither Chapter 13 (European cross-border transfers of |
| |
business) nor Chapter 14 (European cross-border mergers) applies in relation |
| |
| 25 |
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(a) | “company A” and “company B” have the same meaning as in section |
| |
| |
(b) | “original shares” has the same meaning as it has for the purposes of |
| |
sections 126 to 131 of that Act, as applied by section 135 of that Act, and |
| 30 |
(c) | “receiving company” means the company to which the issue of shares |
| |
in or debentures of company B mentioned in section 135(1) of that Act |
| |
| |
(8) | If company B is a company to which section 135(5) of TCGA 1992 applies |
| |
(companies with no share capital), the reference in subsection (7)(c) to the |
| 35 |
shares in or debentures of company B includes a reference to any interests in |
| |
the company possessed by its members. |
| |
Continuity of treatment: transfer of loan at notional carrying value |
| |
340 | Group transfers and transfers of insurance business: transfer at notional |
| |
| 40 |
(1) | This section applies in the cases mentioned in— |
| |
(a) | section 336 (transfers of loans on group transactions), and |
| |
(b) | section 337 (transfers of loans on insurance business transfers). |
| |
|
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|
| |
|
(2) | The credits and debits to be brought into account for the purposes of this Part |
| |
in respect of the loan relationship referred to in section 336(1)(b) or section |
| |
337(1)(b) are determined in accordance with subsections (3) to (5). |
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(3) | For the accounting period in which the transaction or, as the case may be, the |
| |
first of the series of transactions takes place, the transferor is treated as having |
| 5 |
entered into that transaction for consideration of an amount equal to the |
| |
notional carrying value of the asset or liability representing the relationship |
| |
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(4) | For any accounting period in which the transferee is a party to the relationship, |
| |
it is treated as if it had acquired the asset or liability representing the |
| 10 |
relationship for consideration of an amount equal to its notional carrying |
| |
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(5) | If a discount arises in respect of the transaction or series of transactions, the |
| |
consideration is increased for the purposes of subsection (3) (but not subsection |
| |
(4)) by the amount of the discount. |
| 15 |
(6) | For the purposes of this section— |
| |
(a) | “carrying value” has the same meaning as it has for the purposes of |
| |
section 316 (see section 317), |
| |
(b) | section 480(5) (when discount arises) applies as it applies for the |
| |
purposes of section 480, and |
| 20 |
(c) | “notional carrying value”, in relation to an asset or liability, means the |
| |
amount which would have been its carrying value in the accounts of the |
| |
transferor if a period of account had ended immediately before the date |
| |
when the transferor ceased to be a party to the loan relationship. |
| |
(7) | Schedule 28AA to ICTA (provision not at arm’s length) does not apply in |
| 25 |
relation to the amounts in respect of which credits or debits are to be brought |
| |
into account under this section. |
| |
(8) | This section is subject to sections 332 and 341. |
| |
341 | Transferor using fair value accounting |
| |
(1) | This section applies instead of section 340 if, in a case where that section would |
| 30 |
otherwise apply, the transferor is regarded for the purposes of this section as |
| |
using fair value accounting in respect of the loan relationship (see subsection |
| |
| |
(2) | The amount which is to be brought into account by the transferor in respect of |
| |
the transaction or the series of transactions referred to in section 340(3) (“the |
| 35 |
transferor’s amount”) is— |
| |
(a) | if an asset is to be brought into account, its fair value as at the date when |
| |
the transferee becomes party to the loan relationship, or the fair value |
| |
of the rights under or interest in it as at that date, and |
| |
(b) | if a liability is to be brought into account, its fair value as at that date. |
| 40 |
(3) | For any accounting period in which the transferee is a party to the loan |
| |
relationship, for the purpose of determining the credits and debits to be |
| |
brought into account in respect of the relationship for the purposes of this Part, |
| |
the transferee is treated as if it had acquired the asset or liability representing |
| |
the relationship for consideration of an amount equal to the transferor’s |
| 45 |
| |
|
| |
|
| |
|
(4) | If a discount arises in respect of the transaction or series of transactions, the |
| |
transferor’s amount is increased for the purposes of subsection (2) (but not |
| |
subsection (3)) by the amount of the discount. |
| |
(5) | The transferor is regarded for the purposes of this section as using fair value |
| |
accounting in respect of the loan relationship only if the credits and debits to |
| 5 |
be brought into account for the purposes of this Part as respects the |
| |
relationship are determined on that basis. |
| |
(6) | It does not matter for the purposes of subsection (5) if the transferor does not |
| |
otherwise use fair value accounting in respect of the loan relationship. |
| |
(7) | For the purposes of this section, section 480(5) (when discount arises) applies |
| 10 |
as it applies for the purposes of section 480. |
| |
(8) | This section is subject to section 332. |
| |
342 | Issues of new securities on reorganisations: disposal at notional carrying |
| |
| |
(1) | This section applies in the case mentioned in section 339. |
| 15 |
(2) | For the purposes of this Part such debits and credits are to be brought into |
| |
account as would be brought into account if the exchange were a disposal of |
| |
the asset representing the loan relationship referred to in section 339(3) for |
| |
consideration of an amount equal to its notional carrying value. |
| |
(3) | For the purposes of this section, the notional carrying value of that asset is the |
| 20 |
amount that would have been its carrying value in the accounts of the receiving |
| |
company if a period of account had ended immediately before the date when |
| |
| |
| |
“carrying value” has the same meaning as it has for the purposes of |
| 25 |
section 316 (see section 317), and |
| |
“receiving company” has the meaning given in section 339(7). |
| |
(5) | This section is subject to section 343. |
| |
343 | Receiving company using fair value accounting |
| |
(1) | This section applies instead of section 342 if, in a case where that section would |
| 30 |
otherwise apply, the receiving company is regarded for the purposes of this |
| |
section as using fair value accounting in respect of the loan relationship |
| |
constituting or included in the original shares. |
| |
(2) | The amount which is to be brought into account by the receiving company in |
| |
respect of the exchange (“the disposal amount”) is the fair value of the asset |
| 35 |
| |
or of the rights under or interest in that relationship as at that date. |
| |
(3) | For any accounting period in which company B is a party to the loan |
| |
relationship, for the purpose of determining the credits and debits to be |
| |
brought into account in respect of the relationship for the purposes of this Part, |
| 40 |
company B is treated as if it had acquired the asset representing the |
| |
relationship for consideration of an amount equal to the disposal amount. |
| |
|
| |
|
| |
|
(4) | Subsections (5) and (6) of section 341 apply for the purposes of this section as |
| |
they apply for the purpose of that section, taking references in that section to |
| |
the transferor as references to the receiving company. |
| |
(5) | In this section “company B”, “original shares” and “receiving company” have |
| |
the meaning given in section 339(7). |
| 5 |
Transferee leaving group after replacing transferor as party to loan relationship |
| |
| |
(1) | Sections 345 and 346 apply if— |
| |
(a) | this Chapter applies in the case mentioned in section 336 (transfers of |
| |
loans on group transactions), and |
| 10 |
(b) | before the end of the relevant 6 year period and while still a party to the |
| |
relevant loan relationship, the transferee ceases to be a member of the |
| |
| |
(2) | But the transferee is not treated for the purposes of this section and sections 345 |
| |
and 346 as having left the relevant group if— |
| 15 |
(a) | an asset or liability which represents a loan relationship is transferred |
| |
in the course of a transfer or merger in relation to which Chapter 13 |
| |
(European cross-border transfers of business) or Chapter 14 (European |
| |
cross-border mergers) applies, and |
| |
(b) | the transferee ceases to be a member of the relevant group in |
| 20 |
consequence of the transfer or merger. |
| |
(3) | In a case where subsection (2) applies, if the transferee becomes a member of |
| |
another group in consequence of the transfer or merger, it is treated for the |
| |
purposes of this section and sections 345 and 346 as if the relevant group and |
| |
the other group were the same. |
| 25 |
(4) | In this section and sections 345 and 346— |
| |
“the relevant 6 year period” means the period of 6 years following— |
| |
(a) | in a case where section 340 applies because of a transaction |
| |
within section 336(2) (“case A”), that transaction, or |
| |
(b) | in a case where section 340 applies because of a series of |
| 30 |
transactions within section 336(3) (“case B”), the last transaction |
| |
| |
“the relevant group” means— |
| |
(a) | in case A, the group mentioned in section 336(2), and |
| |
(b) | in case B, the group mentioned in section 336(3), and |
| 35 |
“the relevant loan relationship” means the loan relationship mentioned in |
| |
| |
345 | Transferee leaving group otherwise than because of exempt distribution |
| |
(1) | This section applies if— |
| |
(a) | the transferee ceases to be a member of the relevant group, and |
| 40 |
(b) | it does not so cease just because of a distribution which is exempt as a |
| |
| |
(i) | section 213(2) of ICTA (exempt distributions), or |
| |
|
| |
|
| |
|
(ii) | section 213A of ICTA (exempt distributions: division of |
| |
| |
(2) | If condition A or B is met, this Part applies as if— |
| |
(a) | the transferee had assigned the asset or liability representing the |
| |
relevant loan relationship immediately before ceasing to be a member |
| 5 |
| |
(b) | the assignment had been for consideration of an amount equal to the |
| |
fair value of the asset or liability at that time, and |
| |
(c) | the transferee had immediately reacquired the asset or liability for |
| |
consideration of the same amount. |
| 10 |
(3) | Condition A is that if this Part applied as mentioned in subsection (2) because |
| |
of that subsection applying, a credit would be brought into account for the |
| |
purposes of this Part by the transferee because of subsection (2)(a) and (b). |
| |
| |
(a) | the relevant loan relationship is a creditor relationship, |
| 15 |
(b) | the transferee has a hedging relationship between a derivative contract |
| |
and the creditor relationship, and |
| |
(c) | because of section 631(2)(a) and (b) (transferee leaving group otherwise |
| |
than because of exempt distribution) a credit is to be brought into |
| |
account by the transferee for the purposes of Part 7 (derivative |
| 20 |
contracts) in respect of the derivative contract. |
| |
(5) | Section 707 (meaning of “hedging relationship”) applies for the purposes of |
| |
| |
346 | Transferee leaving group because of exempt distribution |
| |
(1) | This section applies if— |
| 25 |
(a) | the transferee ceases to be a member of the relevant group just because |
| |
of a distribution which is exempt as a result of— |
| |
(i) | section 213(2) of ICTA (exempt distributions), or |
| |
(ii) | section 213A of that Act (exempt distributions: division of |
| |
| 30 |
(b) | there is a chargeable payment within the meaning of section 214(2) of |
| |
that Act (chargeable payments connected with exempt distributions) |
| |
within 5 years after the making of that distribution. |
| |
(2) | If condition A or B is met, this Part applies as if— |
| |
(a) | the transferee had assigned the asset or liability representing the |
| 35 |
relevant loan relationship immediately before the chargeable payment |
| |
| |
(b) | the assignment had been for consideration of an amount equal to the |
| |
fair value of the asset or liability immediately before the transferee |
| |
ceased to be a member of the relevant group, and |
| 40 |
(c) | the transferee had immediately reacquired the asset or liability for |
| |
consideration of the same amount. |
| |
(3) | Condition A is that if subsection (2) applied a credit would be brought into |
| |
account for the purposes of this Part by the transferee because of subsection |
| |
| 45 |
| |
|
| |
|