Corporation Tax Act 2009 section 434

Transferor using fair value accounting

Section 434 provides the rule that applies in place of section 433 when a transferor company in a European cross-border merger uses fair value accounting for a loan relationship being transferred.

• Where the transferor uses fair value accounting for a loan relationship, section 433's notional carrying value rules are displaced and section 434 applies instead
• The transferor brings into account the fair value of the transferred asset or liability as at the date the transferee becomes a party to the loan relationship
• The transferee is treated as having acquired the asset or liability for consideration equal to that fair value amount (the "transferor's amount")
• What matters is whether the transferor's loan relationship credits and debits are determined on a fair value basis for corporation tax purposes, regardless of whether fair value accounting is used for other purposes