Corporation Tax Act 2009 section 449

Exchange gains and losses on creditor relationships: no corresponding debtor relationship

Section 449 requires certain exchange gains and losses arising on creditor relationships to be disregarded for corporation tax purposes where the underlying loan would not have been made at arm's length and there is no corresponding debtor relationship.

• Where a company holds a creditor relationship and an exchange gain or loss arises on the asset representing that relationship, the gain or loss must be excluded from the loan relationships credits and debits if the loan would not have been entered into at arm's length and there is no corresponding debtor relationship.
• Where the creditor relationship is partly matched, only the exchange gain or loss attributable to the unmatched portion is excluded — the matched portion remains within account. The unmatched amount may be nil, meaning nothing is excluded.
• The term "corresponding debtor relationship" is defined separately in section 450, and broadly considers whether there is a debtor relationship that corresponds to the creditor relationship in question.
• An exception applies under section 451 where the loan exceeds the arm's length amount, in which case the exclusion under this section may not apply or may be modified.