Corporation Tax Act 2009 section 455

Disposals for consideration not fully recognised by accounting practice

Section 455 addresses situations where a company disposes of rights under a creditor relationship and the disposal proceeds are not fully reflected in the accounts, requiring the amounts to be brought into account where there is a tax avoidance intention.

• Where a company disposes of rights under a creditor relationship, the disposal consideration must be brought into account for tax purposes even if accounting practice does not fully recognise it.
• This rule applies specifically where the accounting treatment fails to wholly reflect the consideration received or receivable on the disposal.
• The provision is targeted at arrangements where there is an intention to avoid tax — it does not apply to ordinary commercial transactions where the accounting treatment simply differs from the tax treatment.
• The effect is to ensure that the full disposal proceeds are recognised for corporation tax purposes, preventing companies from exploiting gaps between accounting recognition and economic reality to reduce their tax liability.

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