Corporation Tax Act 2009 section 340

Group transfers and transfers of insurance business: transfer at notional carrying value

Section 340 ensures that when a loan relationship is transferred between group companies or as part of an insurance business transfer, the transfer is treated as taking place at notional carrying value (essentially book value), so that no taxable gain or allowable loss arises on the transfer itself.

• When a loan relationship is transferred within a group or via an insurance business transfer, the transaction is deemed to take place at the notional carrying value of the asset or liability, effectively preventing any gain or loss from arising on the transfer.
• The notional carrying value is the tax-adjusted carrying value that would have appeared in the transferor's accounts if an accounting period had ended immediately before the transferor ceased to be a party to the loan relationship.
• If a discount arises on the transaction, the transferor's deemed consideration is increased by the amount of that discount, but the transferee's acquisition cost remains at the notional carrying value without any such adjustment.
• The transfer pricing rules in Part 4 of the Taxation (International and Other Provisions) Act 2010 do not apply to the amounts brought into account under this section, and the section only applies where the transferor uses the amortised cost basis — separate rules in section 341 apply where fair value accounting is used.