Corporation Tax Act 2009 section 357

Exception to section 354: insolvent creditors

Section 357 provides an exception to the general rule that prevents impairment losses or release debits from being recognised where the creditor and debtor companies are connected, by allowing such debits where the creditor company is subject to a formal insolvency process.

• Where a creditor company is in insolvent liquidation, insolvent administration, or insolvent administrative receivership, impairment losses and release debits on connected company debts may be brought into account for corporation tax purposes
• The debit must accrue during the relevant insolvency period — for example, during the course of the winding up, the administration, or while the administrative receiver's appointment is in force
• The exception also applies where a provisional liquidator has been appointed under the Insolvency Act 1986 (or the equivalent Northern Ireland legislation), and the debit accrues while that appointment is in force
• Where equivalent insolvency circumstances exist under the law of a country or territory outside the United Kingdom, the same exception applies at the corresponding relevant time