Corporation Tax Act 2009 section 363A

Arrangements for avoiding section 361 or 362

Section 363A is an anti-avoidance rule that prevents arrangements designed to avoid or reduce the taxable credit arising when a connected company acquires a loan at undervalue or when parties become connected where the debt has been impaired.

• Where arrangements have a main purpose of avoiding or reducing the deemed release amount under sections 361 or 362, those arrangements are disregarded for tax purposes
• The effect is that the full deemed release amount (or a greater amount than would otherwise apply) is brought into charge to corporation tax as if the arrangements had not been entered into
• "Arrangements" is defined very broadly to include any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable
• The rule applies where avoidance is the main purpose, or one of the main purposes, of any party to the arrangements — it does not need to be the sole purpose