Corporation Tax Act 2009 section 324

Restriction on debits resulting from revaluation

Section 324 restricts the tax debits that a company can recognise when it revalues an asset representing a creditor loan relationship, limiting allowable debits to impairment losses and debt releases unless fair value accounting applies.

• When a company revalues an asset representing a creditor relationship, no tax debit may be recognised except for an impairment loss or a debit arising from the company releasing a liability under that relationship.
• Revaluation includes any provision or allowance that reduces the carrying value of the asset, whether applied to the individual asset or to a group of assets that includes it.
• Where a hedging relationship exists between a relevant contract and the loan relationship asset or liability, credits and debits may still be brought into account for fair value changes attributable to the hedged risks.
• The restriction does not affect debits for foreign exchange gains or losses, and it does not apply at all where the company uses fair value accounting for the relationship.