Corporation Tax Act 2009 section 326

Writing off government investments

Section 326 provides that when the government writes off an investment it has made in a company, the company does not have to recognise a taxable credit in respect of the debt being released.

• Where the government has invested in a company through a loan or other debt arrangement, it may later choose to write off that investment by releasing the company from its obligation to repay.
• Normally, when a creditor releases a company from a debt, the company would need to recognise a taxable credit under the loan relationships rules — effectively treating the forgiven amount as income.
• This section provides a specific exemption: the company is not required to bring any credit into account for corporation tax purposes when a government investment is written off in this way.
• The meaning of a "government investment being written off" is defined by reference to section 94 of the Corporation Tax Act 2010, which sets out the circumstances in which a government investment is considered to have been written off.