Corporation Tax Act 2010 section 938A

Losses and profits from group mismatch schemes to be disregarded

Section 938A sets out the rule that scheme losses and profits arising from group mismatch schemes must be disregarded for corporation tax purposes, and explains how this interacts with other tax provisions.

• The section applies to any company that is, at any time, a party to a group mismatch scheme and is a member of the relevant scheme group.
• Any scheme loss or profit the company makes in any accounting period in relation to the scheme is disregarded — it cannot be brought into account as a debit or credit under the loan relationships rules or the derivative contracts rules.
• Although the amounts are disregarded, they are still treated as if they had been brought into account under the loan relationships or derivative contracts rules for the purpose of the priority rules in those regimes.
• This means the disregarded amounts cannot be picked up and taxed (or relieved) under any other corporation tax provision either — they are effectively neutralised entirely.