Corporation Tax Act 2009 section 465B

Tax-adjusted carrying value

Section 465B defines the concept of "tax-adjusted carrying value" for loan relationships, explaining how the accounting carrying value of a loan asset or liability is adjusted for tax purposes by applying various statutory modifications.

• The tax-adjusted carrying value starts with the accounting carrying value of the loan relationship asset or liability, including accrued amounts, advance payments or receipts, and impairment losses (such as bad debt provisions)
• The accounting carrying value is then modified by a wide range of statutory provisions — covering areas such as connected company rules, group transfers, impairment restrictions, index-linked gilts, deeply discounted securities, embedded derivatives, and cross-border transactions — to arrive at the figure used for tax purposes
• When determining the tax-adjusted carrying value for a period, it is assumed that the accounting policy used in the current period also applied in earlier periods, unless the accounts for the period were properly drawn up under generally accepted accounting practice using a different transitional assumption
• If the tax-adjusted carrying value needs to be calculated at a date that does not coincide with the start or end of an accounting period, it is assumed that an accounting period ended at that date