|
| |
|
Continuity of treatment: transfer of loan at notional carrying value |
| |
340 | Group transfers and transfers of insurance business: transfer at notional |
| |
| |
(1) | This section applies in the cases mentioned in— |
| |
(a) | section 336 (transfers of loans on group transactions), and |
| 5 |
(b) | section 337 (transfers of loans on insurance business transfers). |
| |
(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). |
| |
(3) | For the accounting period in which the transaction or, as the case may be, the |
| 10 |
first of the series of transactions takes place, the transferor is treated as having |
| |
entered into that transaction for consideration of an amount equal to the |
| |
notional carrying value of the asset or liability representing the relationship |
| |
| |
(4) | For any accounting period in which the transferee is a party to the relationship, |
| 15 |
it is treated as if it had acquired the asset or liability representing the |
| |
relationship for consideration of an amount equal to its notional carrying |
| |
| |
(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 |
| 20 |
(4)) by the amount of the discount. |
| |
(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 |
| 25 |
purposes of section 480, and |
| |
(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. |
| 30 |
(7) | Schedule 28AA to ICTA (provision not at arm’s length) does not apply in |
| |
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 |
| 35 |
(1) | This section applies instead of section 340 if, in a case where that section would |
| |
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 |
| 40 |
the transaction or the series of transactions referred to in section 340(3) (“the |
| |
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. |
| |
(3) | For any accounting period in which the transferee is a party to the loan |
| 5 |
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 |
| |
| 10 |
(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 |
| 15 |
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 |
| 20 |
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. |
| 25 |
(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 |
| 30 |
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 |
| 35 |
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 |
| 40 |
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 |
| |
| |
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 |
| 5 |
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, |
| |
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 |
| 10 |
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). |
| |
Transferee leaving group after replacing transferor as party to loan relationship |
| 15 |
| |
(1) | Sections 345 and 346 apply if— |
| |
(a) | this Chapter applies in the case mentioned in section 336 (transfers of |
| |
loans on group transactions), |
| |
(b) | section 341 (transferor using fair value accounting) does not apply, and |
| 20 |
(c) | 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— |
| 25 |
(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 |
| 30 |
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. |
| 35 |
(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 |
| 40 |
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 |
| 45 |
|
| |
|
| |
|
“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 |
| 5 |
(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 |
| |
| 10 |
(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 |
| |
| |
(b) | the assignment had been for consideration of an amount equal to the |
| 15 |
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. |
| |
(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 |
| 20 |
purposes of this Part by the transferee because of subsection (2)(a) and (b). |
| |
| |
(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 |
| 25 |
(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 |
| |
contracts) in respect of the derivative contract. |
| |
(5) | Section 707 (meaning of “hedging relationship”) applies for the purposes of |
| 30 |
| |
346 | Transferee leaving group because of exempt distribution |
| |
(1) | This section applies if— |
| |
(a) | the transferee ceases to be a member of the relevant group just because |
| |
of a distribution which is exempt as a result of— |
| 35 |
(i) | section 213(2) of ICTA (exempt distributions), or |
| |
(ii) | section 213A of that Act (exempt distributions: division of |
| |
| |
(b) | there is a chargeable payment within the meaning of section 214(2) of |
| |
that Act (chargeable payments connected with exempt distributions) |
| 40 |
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 |
| |
relevant loan relationship immediately before the chargeable payment |
| |
| 45 |
|
| |
|
| |
|
(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 |
| |
(c) | the transferee had immediately reacquired the asset or liability for |
| |
consideration of the same amount. |
| 5 |
(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 |
| |
| |
| |
(a) | the relevant loan relationship is a creditor relationship, |
| 10 |
(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 |
| |
transferee for the purposes of Part 7 (derivative contracts) in respect of |
| 15 |
| |
(5) | Section 707 (meaning of “hedging relationship”) applies for the purposes of |
| |
| |
Disapplication of Chapter where transferor party to avoidance |
| |
347 | Disapplication of Chapter where transferor party to avoidance |
| 20 |
(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. |
| |
(2) | Condition A is that the transferor is a party to arrangements in accordance with |
| 25 |
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 |
| |
arrangements is to secure a tax advantage for the transferor or a person |
| 30 |
| |
(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. |
| |
| 35 |
“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 |
| |
decrease in, a share of the profits or assets of a partnership). |
| 40 |
|
| |
|
| |
|
| |
Connected companies relationships: introduction and general |
| |
348 | Introduction: meaning of “connected companies relationship” |
| |
(1) | This Chapter contains some general rules relating to connected companies |
| |
| 5 |
(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 |
| |
| 10 |
(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— |
| 15 |
| |
(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 |
| 20 |
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 |
| 25 |
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 |
| 30 |
(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. |
| 35 |
(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). |
| |
|
| |
|