Taxation (International and Other Provisions) Act 2010 section 198

Balancing payments by guarantor to issuer: no charge to, or relief from, tax

Section 198 ensures that balancing payments made by a guarantor company to an issuing company are ignored for corporation tax purposes, provided all qualifying conditions under section 197 are met and the payments do not exceed the relevant reductions.

• Where all the qualifying conditions in section 197 are satisfied, balancing payments made by guarantor companies receive special tax treatment
• The special treatment applies only to the extent that the total balancing payments do not exceed the total amount of the reductions specified in section 197(4)
• Qualifying balancing payments are excluded from the calculation of profits or losses for corporation tax purposes for both the guarantor and issuing companies
• Qualifying balancing payments are not treated as distributions for any purpose of the Corporation Tax Acts