Corporation Tax Act 2009 section 666

Disapplication of section 666

Section 666 deals with the transitional rule that prevents certain companies from claiming an allowable loss under the derivative contracts rules where the relevant debt existed before 1 January 2005.

• Section 666 normally allows an allowable loss to be treated as accruing in connection with securities that have embedded derivatives.
• This transitional provision disapplies section 666 for companies that held the relevant debtor relationship before 1 January 2005.
• The key test is whether the company owed the liability immediately before its first accounting period beginning on or after 1 January 2005.
• Companies that took on the debtor relationship after that date remain within the scope of section 666.