Corporation Tax Act 2009 section 332

Repo, stock lending and other transactions

Section 332 deals with situations where a company has technically ceased to be party to a loan relationship but continues to recognise amounts relating to it in its accounts under accepted accounting standards.

• Where a company ceases to be party to a loan relationship during an accounting period — for example, through a repo or stock lending arrangement — special rules apply to ensure amounts are still brought into account for tax purposes.
• If the company continues, in accordance with generally accepted accounting practice (GAAP), to recognise amounts in its accounts in respect of that former loan relationship, those amounts must still be brought into account for corporation tax.
• This rule prevents a mismatch between the accounting treatment and the tax treatment where the legal and economic positions diverge — the accounting entries take precedence for tax purposes.
• The provision applies regardless of the reason the company ceased to be party to the loan relationship, covering repos, stock lending arrangements, and any other type of transaction that produces this effect.