Corporation Tax Act 2009 section 320B

Hybrid capital instruments: amounts recognised in equity

Section 320B ensures that amounts relating to hybrid capital instruments that are posted to equity or shareholders' funds, rather than to profit or loss or other comprehensive income, are still brought into the corporation tax loan relationships rules.

• Where an amount on a hybrid capital instrument is recognised in equity or shareholders' funds but not in profit or loss or other comprehensive income, it must still be brought into account for tax purposes
• The amount is treated for tax as though it were a credit or debit recognised in profit or loss under generally accepted accounting practice
• This ensures that hybrid capital instruments cannot escape the loan relationships tax rules simply because the accounting entries bypass the income statement
• Exchange gains or losses recognised in statements of changes in equity or similar equity statements are excluded from this provision