D1.7100 Transitional provisions for loan relationships on a change in accounting policy
The following paragraphs consider the transitional rules which apply where a company changes the basis on which it accounts for a loan relationship. These rules apply where, for example, a company begins to prepare its accounts in accordance with international financial reporting standard (IFRS) or UK GAAP incorporating FRS 26, having previously prepared its accounts in accordance with UK GAAP excluding FRS 26.
This paragraph sets out the general rules. There are certain exceptions to the general rule which are considered below.
Where a company begins to prepare its accounts in accordance with a new accounting policy, any difference between the carrying value of a loan relationship at the end of the previous period of account and its opening value for the purposes of the new policy will be treated as a debit or credit for the purposes of the loan relationships legislation.
For accounting periods beginning on or after 1 January 2016 this difference is picked up under CTA 2009, s 316 which requires that a comparison is done of the carrying value of the loan relationship for the purposes of the loan relationships legislation at the end of the preceding period and its carrying value for these purposes at the start of the accounting period in which the change of accounting treatment takes effect. CTA 2009, s 316 provides that this difference is to be brought into