Taxation (International and Other Provisions) Act 2010 section 412

Section 411: interpretation

Section 412 provides the detailed definitions and interpretation rules needed to apply the corporate interest restriction calculations of relevant expense amounts and relevant income amounts under section 411.

• Expenses are "ancillary" to a loan relationship, derivative contract, or related transaction only if they are directly incurred in creating the arrangement, making or securing payments under it, or entering into or giving effect to the related transaction.
• A derivative contract is "relevant" for interest restriction purposes only if its underlying subject matter consists solely of interest rates, inflation indices, currency, or loan relationship assets/liabilities (with minor or subordinate exceptions assessed at the time the contract is entered into).
• Where a company in a financial trade hedges risks using relevant derivative contracts, losses or gains only count as arising from a "financial trade" to the extent the underlying risks relate to amounts that are, or are likely to be, relevant expense amounts or relevant income amounts of the worldwide group.
• Key terms used in section 411 — including "related transaction", "exchange gain", "exchange loss", "alternative finance return", "creditor repo", "debtor repo", "manufactured interest", and "underlying subject matter" — take their meanings from the corresponding parts of the Corporation Tax Act 2009 and Corporation Tax Act 2010.

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