Corporation Tax Act 2009 section 330A

Company is not, or has ceased to be, party to loan relationship

Section 330A ensures that where a company recognises amounts in its accounts in respect of a loan relationship to which it is not legally a party, it is treated for corporation tax purposes as though it were a party to that relationship.

• Where a company's accounts recognise profit or loss amounts relating to a loan relationship (or equivalent arrangement) to which it is not currently a party, and one of four specified conditions is met, the company must bring tax credits and debits into account as if it were a party for the whole accounting period.
• The four conditions cover: residual amounts still being recognised after the company was previously a party (Condition A); a transfer of risk or reward without a corresponding transfer of legal rights or obligations (Condition B); amounts arising from a related transaction after the company ceased to be a party (Condition C); and amounts recognised because the company may enter into a relationship but has not yet done so, provided these are not pre-loan relationship or abortive expenses already dealt with elsewhere (Condition D).
• The amounts brought into account are those recognised in the company's accounts as items of profit or loss in respect of the qualifying relationship, subject to other provisions of Part 5 of the Act.
• This section is subject to further rules that prevent a debit being allowed where relief has already been given under another provision, and that prevent a double tax charge arising on the same amounts.