Corporation Tax Act 2009 section 320

Credits and debits treated as relating to capital expenditure

Section 320 deals with how loan relationship amounts that have been capitalised into the value of an asset or liability are brought into account for corporation tax purposes when the asset or liability itself is not taxed under normal accounting rules.

• Where a loan relationship amount is capitalised into the carrying value of an asset or liability, but that asset or liability is not taxed under normal accounting rules, the amount must still be recognised as a taxable credit or debit in the period it arises
• The amount is treated for tax purposes in the same way as if it had been recognised in the company's profit or loss account under generally accepted accounting practice
• This rule does not apply where the capitalised amount relates to an intangible fixed asset for which the company has elected to use the fixed-rate writing-down basis under section 730
• Where a capitalised amount is brought into account as a debit under this rule, no further debit can be claimed for any subsequent writing down, amortisation, or depreciation of the portion of the asset or liability's value attributable to that debit