Corporation Tax Act 2009 section 350

Companies beginning to be connected

Section 350 sets out the rules that apply when two companies become connected and, as a result, need to change their accounting treatment of a loan relationship from fair value accounting to the amortised cost basis.

• When companies become connected (as defined in section 348), a loan relationship between them may need to change its accounting basis from fair value to amortised cost.
• The change in accounting basis is triggered specifically by the connection arising between the companies, not by any voluntary choice of accounting policy.
• The section provides rules to manage the transition so that the switch in accounting method is handled correctly for corporation tax purposes.
• Any adjustments arising from the move to amortised cost accounting must be dealt with in accordance with this section, ensuring that gains or losses are properly recognised at the point the companies become connected.