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327 | Disallowance of imported losses etc |
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(1) | This section applies for an accounting period of a company (“the loss period”) |
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(a) | apart from this section, a loss arising in connection with a loan |
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relationship of the company would fall to be brought into account for |
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the purposes of this Part, and |
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(b) | the loss is wholly or partly referable to a time when the relationship was |
| |
not subject to United Kingdom taxation. |
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(2) | The amounts brought into account for the loss period for the purposes of this |
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Part must be such as to secure that none of the loss referable to a time when the |
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relationship was not so subject is treated for those purposes as arising in the |
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loss period or any other accounting period of the company. |
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(3) | For the purposes of this section a loss is referable to a time when a relationship |
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is not subject to United Kingdom taxation so far as, at the time to which the loss |
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is referable, the company would not have been chargeable to corporation tax in |
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the United Kingdom on any profits arising from the relationship. |
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(4) | If the company was not a party to the relationship at the time to which the loss |
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is referable, subsection (3) applies as if the reference to the company were a |
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reference to the person who at that time was in the same position as respects |
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the relationship as is subsequently held by the company. |
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(5) | An amount which would be brought into account for the purposes of this Part |
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in respect of any matter apart from this section is treated for the purposes of |
| |
section 464(1) (amounts brought into account under this Part excluded from |
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being otherwise brought into account) as if it were so brought into account. |
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(6) | Accordingly, that amount must not be brought into account for corporation tax |
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purposes as respects that matter either under this Part or otherwise. |
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(7) | This section does not apply if fair value accounting is used. |
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Exchange gains and losses |
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328 | Exchange gains and losses |
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(1) | The reference in section 307(3) to the profits and losses arising to a company |
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from its loan relationships and related transactions includes a reference to |
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exchange gains and losses so arising. |
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(2) | But subsection (1) is subject to subsections (3) and (4). |
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(3) | Subsection (1) does not apply to an exchange gain or loss of a company so far |
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(i) | in relation to an asset or liability representing a loan |
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relationship of the company, or |
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(ii) | as a result of the translation from one currency to another of the |
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profit or loss of part of the company’s business, and |
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(b) | it is recognised in the company’s statement of total recognised gains |
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and losses, statement of recognised income and expense, statement of |
| |
changes in equity or statement of income and retained earnings. |
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|
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|
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(4) | Subsection (1) does not apply to so much of an exchange gain or loss arising to |
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a company in relation to an asset or liability representing a loan relationship of |
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the company as is within a description specified for the purpose in regulations |
| |
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(5) | The Treasury may by regulations make provision for or in connection with |
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bringing into account in specified circumstances amounts to which subsection |
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(1) does not apply because of subsection (3) or (4). |
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(6) | The reference in subsection (5) to bringing amounts into account is a reference |
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to bringing amounts into account for the purposes of this Part as credits or |
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debits arising to a company from its loan relationships. |
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(a) | make different provision for different cases, and |
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(b) | make provision subject to an election or to other specified conditions. |
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(8) | For the meaning of references to exchange gains or losses from loan |
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relationships, see section 475. |
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Pre-loan relationship, abortive and pre-trading expenses |
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329 | Pre-loan relationship and abortive expenses |
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(1) | This section applies if— |
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(a) | a company may enter into a loan relationship or related transaction but |
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(b) | it incurs any expenses for purposes connected— |
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(i) | with entering into it, or |
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(ii) | with giving effect to any obligation which might arise under it, |
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(c) | had the company entered into the relationship or transaction, the |
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expenses would be expenses within section 307(3)(c). |
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(2) | The expenses are treated as expenses in relation to which debits may be |
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brought into account in accordance with section 307(3) to the same extent as if |
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the company had entered into the relationship or transaction. |
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330 | Debits in respect of pre-trading expenditure |
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(1) | This section applies if— |
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(a) | a non-trading debit is given for an accounting period of a company for |
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the purposes of this Part, and |
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(b) | within the period of 2 years beginning with the end of the period the |
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company makes an election for the purposes of this section in respect |
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(2) | The debit must not be brought into account for the purposes of this Part as a |
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non-trading debit for that period. |
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(3) | Instead, if conditions A and B are met in respect of a trade, the debit— |
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(a) | is treated for the purposes of this Part as if it were a debit for the |
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accounting period in which the company begins to carry on the trade, |
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(b) | is to be brought into account in accordance with section 297(3) (trading |
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(4) | Condition A is that the company begins to carry on the trade within the period |
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of 7 years after the end of the accounting period for which a non-trading debit |
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is given for the purposes of this Part. |
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(5) | Condition B is that that debit is such that, if it were given for the accounting |
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period in which the company begins to carry on the trade, it would be brought |
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into account by reference to that trade in accordance with section 297(3). |
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Company ceasing to be party to loan relationship |
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331 | Company ceasing to be party to loan relationship |
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(1) | This section applies if— |
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(a) | a company ceases to be a party to a loan relationship in an accounting |
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period (“the cessation period”), |
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(b) | profits or losses arise to the company from the loan relationship in that |
| |
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(c) | the credits or debits brought into account for the purposes of this Part |
| |
for that period do not include credits or debits representing the whole |
| |
of those profits or losses. |
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(2) | Credits or debits in respect of so much of those profits or losses as are not |
| |
represented by credits or debits brought into account for the cessation period |
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must continue to be brought into account under this Part over one or more |
| |
subsequent accounting periods (“post-cessation periods”) as in the case of a |
| |
loan relationship to which the company is a party in those periods. |
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(3) | Subsection (4) applies if any question arises how far in a post-cessation |
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(a) | the company is a party to the loan relationship— |
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(i) | for the purposes of a trade it carries on, or |
| |
(ii) | for any other particular purpose or purposes, or |
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(b) | the loan relationship is referable to a particular business the company |
| |
carries on or a particular description of such business. |
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(4) | The question is to be determined by reference to the circumstances |
| |
immediately before the company ceased to be a party to the loan relationship, |
| |
instead of the circumstances in the post-cessation period. |
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(5) | Subsection (6) applies if any question arises— |
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(a) | how far the loan relationship has a particular purpose in a post- |
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(b) | whether there is a connection between the company and any other |
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person for a post-cessation period for the purposes of this Part. |
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(6) | The question is to be determined by reference to the circumstances in the |
| |
cessation period instead of the circumstances in the post-cessation period. |
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332 | Repo, stock lending and other transactions |
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(1) | This section applies if— |
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|
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|
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|
(a) | a company ceases to be a party to a loan relationship in any accounting |
| |
period, for example as a result of the disposal of the rights or liabilities |
| |
under the relationship under a repo or stock lending arrangement, but |
| |
(b) | nonetheless, in accordance with generally accepted accounting |
| |
practice, amounts in respect of the relationship are recognised in |
| 5 |
determining the profit or loss of the company for that or any |
| |
subsequent accounting period. |
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(2) | Despite ceasing to be a party to the relationship, the company must bring |
| |
amounts in respect of the relationship into account for those periods for the |
| |
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(3) | The amounts that must be so brought into account are those that are so |
| |
recognised in respect of the relationship (but subject to the provisions of this |
| |
Part, including, in particular, section 307(3)). |
| |
(4) | This section does not apply in relation to any amount in respect of a loan |
| |
relationship which is brought into account for this Part as a result of— |
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(a) | section 331 (company ceasing to be party to a loan relationship), or |
| |
(b) | section 550 (ignoring effect on borrower of sale of securities: debtor |
| |
repos, debtor quasi-repos and other arrangements). |
| |
(5) | Section 331(3) and (4) applies in relation to any time after the company ceases |
| |
to be a party to a loan relationship in a case where this section applies as it |
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applies where section 331 applies. |
| |
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333 | Company ceasing to be UK resident |
| |
(1) | If a company ceases to be UK resident, this Part applies as if— |
| |
(a) | immediately before so ceasing the company had assigned the assets |
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and liabilities which represent its loan relationships for consideration |
| |
of an amount equal to their fair value at that time, and |
| |
(b) | it had immediately reacquired them for consideration of the same |
| |
| |
(2) | Subsection (1) does not apply in relation to an asset or liability so far as |
| 30 |
immediately after the company ceases to be UK resident the asset is held or the |
| |
liability is owed for the purposes of a permanent establishment of the company |
| |
| |
(3) | Subsection (1) does not apply if— |
| |
(a) | the conditions in section 344(1)(a) to (c) are met in relation to the |
| 35 |
company (transferee leaving group after replacing transferor as party |
| |
to loan relationship), and |
| |
(b) | it ceases to be UK resident at the same time as it ceases to be a member |
| |
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(4) | In subsection (3) “the relevant group” has the meaning given in section 344(4). |
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