Corporation Tax Act 2010 section 771

Exceptions

Section 771 sets out the circumstances in which the finance arrangement rules (which re-characterise certain transactions as financing arrangements) do not apply, thereby excluding particular types of arrangements from those rules.

• The finance arrangement rules do not apply where the full amount of the advance is already brought into account for tax purposes — either as taxable income of a relevant person, or as a disposal receipt or balancing event proceeds under the capital allowances legislation (provided any resulting balancing charge is not capped by the capital allowances rules).
• The rules also do not apply where the advance constitutes, or would constitute, a debtor loan relationship of a relevant person under the loan relationships regime, excluding relevant non-lending relationships.
• Arrangements already covered by other specific tax regimes — including sale and repurchase of securities (repos), alternative finance arrangements (such as Sharia-compliant products), and sale and finance leaseback transactions involving plant or machinery — are similarly excluded from the finance arrangement rules.
• Right-of-use leases where the relevant person is the lessee are excluded, provided that the lease would not be classified as a finance lease or loan under generally accepted accounting practice.