Corporation Tax Act 2009 section 341

Transferor using fair value accounting

Section 341 sets out the rules that apply when a company transferring a loan relationship within a group (or as part of an insurance business transfer) uses fair value accounting for that relationship, replacing the standard notional carrying value treatment.

• Where the transferor uses fair value accounting for a loan relationship, the normal group transfer rules in section 340 are displaced and this section applies instead.
• The transferor brings the asset or liability into account at its fair value as at the date the transferee becomes a party to the loan relationship, increased by any discount arising on the transaction.
• The transferee is treated as having acquired the asset or liability for a consideration equal to the transferor's fair value amount (without the discount uplift), ensuring continuity for future tax computations.
• What matters is whether the tax credits and debits for the loan relationship are determined on a fair value basis, regardless of the accounting treatment the transferor otherwise applies to the relationship.