Corporation Tax Act 2009 section 441

Loan relationships for unallowable purposes

Section 441 prevents a company from obtaining a tax benefit from credits or debits arising from a loan relationship that has an unallowable purpose.

• Where a loan relationship has an unallowable purpose in an accounting period, credits from exchange gains and debits attributable to that purpose are disallowed on a just and reasonable apportionment basis
• If a credit would otherwise be reduced by an amount that would have been a debit, that reduction is also treated as a disallowable debit to the extent it relates to the unallowable purpose
• Disallowed amounts are treated as though they had been brought into account under the loan relationships rules, so they cannot be relieved or taxed under any other corporation tax provision either
• The definition of "unallowable purpose" is set out in section 442 of the Corporation Tax Act 2009