Corporation Tax Act 2009 section 521A

Introduction to Chapter

Section 521A introduces the rules that treat certain shares held by one company in another as if they were rights under a creditor loan relationship, so that the loan relationships tax rules apply to them instead of the normal share-related tax rules.

• Where company A holds certain types of shares in company B, the loan relationships rules in Part 5 of the Act apply as though those shares were rights under a creditor relationship of company A
• Company A is referred to as "the investing company" and company B as "the issuing company" throughout the Chapter
• Building society shares are excluded, as they are already treated as loan relationships under separate provisions, and shares subject to repo transactions are also excluded to prevent manipulation of the connected party and other exemptions
• When shares begin or cease to qualify under these rules, the chargeable gains consequences are governed by section 116B of the Taxation of Chargeable Gains Act 1992