Corporation Tax Act 2009 section 316

Disregard of pre-2005 disallowed debits

Section 316 transitional provision (Schedule 2, paragraph 62) ensures that certain debits disallowed for tax purposes before 1 January 2005 are excluded when calculating the accounting value of an asset for the purposes of accounting policy change adjustments.

• This rule applies where a debit arose in a period of account beginning before 1 January 2005 and was disallowed for tax purposes under the old loan relationships or general deduction rules.
• The disallowance must have been due to the arm's length assumption formerly required by Schedule 9 to the Finance Act 1996, or because the company could not meet the exceptions for unpaid remuneration under section 74(1)(j) of the Income and Corporation Taxes Act 1988.
• Any such disallowed debit is ignored when working out the accounting value of an asset at the end of that earlier period for the purposes of section 316 of the Corporation Tax Act 2009.
• The effect is to prevent a change of accounting policy from inadvertently bringing back into account debits that were already denied tax relief under the previous tax rules.