Corporation Tax Act 2009 section 342

Issues of new securities on reorganisations: disposal at notional carrying value

Section 342 sets out how debits and credits are calculated when new securities are issued in certain cross-border reorganisations, by treating the loan relationship as disposed of at its notional carrying value.

• Where a cross-border reorganisation involves the issue of new securities (as described in section 339), this section governs the tax treatment of the loan relationship being exchanged.
• The exchange is treated as a disposal of the loan relationship for a consideration equal to its notional carrying value, and debits and credits are brought into account on that basis.
• The notional carrying value is the tax-adjusted carrying value that the receiving company's accounts would have shown if a period of account had ended immediately before the exchange took place.
• This section is subject to an override where the receiving company uses fair value accounting (section 343).