|
| |
|
(a) | the relevant loan relationship is a creditor relationship, |
| |
(b) | the transferee has a hedging relationship between a derivative contract |
| |
and the creditor relationship, and |
| |
(c) | because of section 632(2)(a) and (b) (transferee leaving group because |
| |
of exempt distribution) a credit is to be brought into account by the |
| 5 |
transferee for the purposes of Part 7 (derivative contracts) in respect of |
| |
| |
(5) | Section 707 (meaning of “hedging relationship”) applies for the purposes of |
| |
| |
Disapplication of Chapter where transferor party to avoidance |
| 10 |
347 | Disapplication of Chapter where transferor party to avoidance |
| |
(1) | This Chapter does not apply 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), |
| |
| if conditions A and B are met. |
| 15 |
(2) | Condition A is that the transferor is a party to arrangements in accordance with |
| |
which there is likely to be a transfer of rights or liabilities under the loan |
| |
relationship by the transferee to another person in circumstances in which |
| |
section 336 or 337 would not apply. |
| |
(3) | Condition B is that the purpose or one of the main purposes of the |
| 20 |
arrangements is to secure a tax advantage for the transferor or a person |
| |
| |
(4) | This Chapter does not apply in relation to a disposal in the cases mentioned in |
| |
subsection (1) if section 455 (disposals for consideration not fully recognised by |
| |
accounting practice) applies in relation to the disposal. |
| 25 |
| |
“arrangements” includes any scheme, agreement, understanding, |
| |
transaction or series of transactions, and |
| |
“transfer” includes any arrangement which equates in substance to a |
| |
transfer (including any acquisition or disposal of, or increase or |
| 30 |
decrease in, a share of the profits or assets of a partnership). |
| |
| |
Connected companies relationships: introduction and general |
| |
348 | Introduction: meaning of “connected companies relationship” |
| |
(1) | This Chapter contains some general rules relating to connected companies |
| 35 |
| |
(2) | For the purposes of this Part a debtor relationship of a company is a connected |
| |
companies relationship if there is a connection between— |
| |
| |
(b) | another company standing in the position of a creditor as respects the |
| 40 |
| |
|
| |
|
| |
|
(3) | For the purposes of subsection (2) a company is treated as standing in the |
| |
position of a creditor if it indirectly stands in that position by reference to a |
| |
series of loan relationships or relevant money debts. |
| |
(4) | For the purposes of this Part a creditor relationship of a company is a connected |
| |
companies relationship if there is a connection between— |
| 5 |
| |
(b) | another company standing in the position of a debtor as respects the |
| |
| |
(5) | For the purposes of subsection (4) a company is treated as standing in the |
| |
position of a debtor if it indirectly stands in that position by reference to a series |
| 10 |
of loan relationships or relevant money debts. |
| |
(6) | For the purposes of this Part, if a loan relationship is a connected companies |
| |
relationship at any time in an accounting period, it is treated as being such a |
| |
relationship for the period. |
| |
(7) | In this section “relevant money debt” means a money debt which would be a |
| 15 |
loan relationship if a company directly stood in the position of creditor or |
| |
| |
(8) | Section 466 (companies connected for an accounting period) applies for the |
| |
purposes of this section. |
| |
349 | Application of amortised cost basis to connected companies relationships |
| 20 |
(1) | This section applies if a loan relationship is a connected companies relationship |
| |
for an accounting period. |
| |
(2) | The credits and debits which are to be brought into account for the purposes of |
| |
this Part in respect of the relationship for the period are determined on an |
| |
amortised cost basis of accounting. |
| 25 |
(3) | Subsection (2) does not apply if section 454(4) (which requires fair value |
| |
accounting to be applied to reset bonds etc) applies. |
| |
(4) | See also section 534(8) (which disapplies this section where the requirement to |
| |
apply fair value accounting under section 534(1) applies). |
| |
350 | Companies beginning to be connected |
| 30 |
(1) | This section applies if— |
| |
(a) | a company’s loan relationship becomes a connected companies |
| |
| |
(b) | as a result of the application of section 349 the company— |
| |
(i) | brings into account credits or debits determined in accordance |
| 35 |
with fair value accounting for one accounting period (“the |
| |
| |
(ii) | brings into account credits or debits determined in accordance |
| |
with an amortised cost basis of accounting for the next |
| |
accounting period (“the later period”). |
| 40 |
| |
(a) | the fair value of a relevant asset at the end of the earlier period (“FVA”), |
| |
| |
|
| |
|
| |
|
(b) | the cost of the asset which would be given at that time on an amortised |
| |
cost basis of accounting (“ACA”), |
| |
| the excess must be brought into account for the later period as a debit for the |
| |
| |
(3) | If ACA exceeds FVA, the excess must be brought into account for the later |
| 5 |
period as a credit for the purposes of this Part. |
| |
| |
(a) | the fair value of a relevant liability at the end of the earlier period |
| |
| |
(b) | the cost of the liability which would be given at that time on an |
| 10 |
amortised cost basis of accounting (“ACL”), |
| |
| the excess must to be brought into account for the later period as a credit for |
| |
the purposes of this Part. |
| |
(5) | If ACL exceeds FVL, the excess must to be brought into account for the later |
| |
period as a debit for the purposes of this Part. |
| 15 |
351 | Companies ceasing to be connected |
| |
(1) | This section applies if— |
| |
(a) | a company’s loan relationship ceases to be a connected companies |
| |
| |
(b) | as a result of section 349 ceasing to apply the company— |
| 20 |
(i) | brings into account credits or debits determined in accordance |
| |
with an amortised cost basis of accounting for one accounting |
| |
period (“the earlier period”), and |
| |
(ii) | brings into account credits or debits determined in accordance |
| |
with a fair value basis of accounting for the next accounting |
| 25 |
period (“the later period”). |
| |
| |
(a) | the fair value of a relevant asset at the end of the earlier period (“FVA”), |
| |
| |
(b) | the cost of the asset which would be given at that time on an amortised |
| 30 |
cost basis of accounting (“ACA”), |
| |
| the excess must be brought into account for the later period as a credit for the |
| |
| |
(3) | If ACA exceeds FVA, the excess must be brought into account for the later |
| |
period as a debit for the purposes of this Part. |
| 35 |
| |
(a) | the fair value of a relevant liability at the end of the earlier period |
| |
| |
(b) | the cost of the liability which would be given at that time on an |
| |
amortised cost basis of accounting (“ACL”), |
| 40 |
| the excess must be brought into account for the later period as a debit for the |
| |
| |
(5) | If ACL exceeds FVL, the excess must be brought into account for the later |
| |
period as a credit for the purposes of this Part. |
| |
|
| |
|
| |
|
352 | Disregard of related transactions |
| |
(1) | This section applies in an accounting period if— |
| |
(a) | section 349 applies in respect of a creditor relationship of a company for |
| |
| |
(b) | a related transaction takes place in relation to the relationship in the |
| 5 |
| |
(2) | The credits brought into account in respect of the relationship for the period for |
| |
the purposes of this Part must not be less than they would have been if— |
| |
(a) | the transaction had not taken place, and |
| |
(b) | no amounts had accrued after the transaction took place. |
| 10 |
(3) | The debits brought into account in respect of the loan relationship for the |
| |
period for the purposes of this Part must not be more than they would have |
| |
| |
(4) | Nothing in this section affects the credits or debits to be brought into account |
| |
for the purposes of this Part in respect of exchange gains or losses arising from |
| 15 |
| |
| |
Connected companies relationships: impairment losses and releases of debts |
| |
| |
353 | Introduction to Chapter |
| 20 |
(1) | This Chapter contains rules about impairment losses and releases of debts in |
| |
the case of companies connected with other companies. |
| |
| |
(a) | sections 354 to 357 (which prevent debits in respect of impairment |
| |
losses and release debits from being brought into account in the case of |
| 25 |
connected companies relationships, subject to some exceptions), |
| |
(b) | sections 358 to 360 (which exclude credits in respect of the release of |
| |
debts or the reversal of impairments from being brought into account |
| |
in that case, except where the release is a deemed release under section |
| |
| 30 |
(c) | sections 361 to 363 (which treat debt releases as occurring when |
| |
impaired debts become held by companies which might otherwise |
| |
benefit from the exclusion under section 358). |
| |
(3) | In this Chapter “release debit” means a debit in respect of a release by a |
| |
company of liability under a creditor relationship of the company. |
| 35 |
(4) | Section 466 (companies connected for an accounting period) applies for the |
| |
purposes of sections 354 to 360. |
| |
(5) | For the circumstances in which companies are connected for sections 361 and |
| |
| |
(6) | For the meaning of “impairment loss” see section 476(1). |
| 40 |
|
| |
|