Corporation Tax Act 2010 section 938O

Losses and profits from tax mismatch scheme to be disregarded

Section 938O requires that losses and profits arising from a tax mismatch scheme are disregarded for loan relationship and derivative contract purposes, while also preventing those amounts from being relieved elsewhere in the corporation tax system.

• Where a company is party to a tax mismatch scheme at any time, any scheme losses or profits must be left out of account for loan relationship and derivative contract purposes.
• The disregarded amounts cannot be brought into account as debits or credits under Part 5 (loan relationships) or Part 7 (derivative contracts) of CTA 2009 in any accounting period.
• Despite being disregarded, the amounts are still treated as though they had been brought into account under the loan relationship or derivative contract rules, preserving the priority of those regimes.
• As a consequence of that deemed recognition, the same amounts cannot be brought into account for any other corporation tax purpose, preventing double counting or alternative relief.