Corporation Tax Act 2009 sections 59–60

Deeply discounted securities held before 1 October 2002

Sections 59 and 60 provide transitional rules for companies holding deeply discounted securities before 1 October 2002, addressing how deferred debits are treated and how unit trusts and open-ended investment companies account for unrealised gains or losses on such securities.

• Where a connection between an issuing company and another company only arose from 1 October 2002 due to legislative changes, the rule postponing debits until redemption (section 407) does not apply to debtor relationships already in existence at that date.
• Where a deferred amount on a deeply discounted security was prevented from being brought into account before 1 October 2002, and the security remains unredeemed, section 409 treats the deferred amount as falling to be recognised in the accounting period of redemption rather than the original period.
• Authorised unit trusts and open-ended investment companies holding deeply discounted securities at the end of their last accounting period before 1 October 2002 must recognise any notional gain or loss (based on the security's adjusted closing value) as a non-trading credit or debit in the accounting period in which the security is first redeemable, actually redeemed, or disposed of.
• The adjusted closing value of a deeply discounted security is the opening value of the rights and liabilities under the loan relationship at the start of the entity's first accounting period beginning on or after 1 October 2002.