Commentary

D1.743 Taxation treatment of relevant non-lending relationships

Corporate tax
Corporate tax | Commentary

D1.743 Taxation treatment of relevant non-lending relationships

Corporate tax | Commentary

D1.743 Taxation treatment of relevant non-lending relationships

There are special rules governing the taxation treatment of certain kinds of interest and discount on money debts which do not arise from a loan relationship because they do not arise from the lending of money1.

Typical examples are late payments for goods and services, interest on judgment debts, interest paid to and by tax authorities and notional interest under the transfer pricing rules2.

These provisions do not apply to a debt in respect of which profits and losses (if any) fall to be brought into account under the derivative contracts or intangible fixed assets legislation3.

Interest

A company has a 'money debt not arising from the lending of money' where it:

  1.  

    •     stands in the position of a debtor or creditor as respects a money debt which does not arise from the lending of money and on which interest is payable to or by the company or in relation to which exchange gains or losses (see below) arise to the company4 or

  2.  

    •     buys or sells the right to receive interest payable on a money debt without disposing of the underlying money debt. In such cases any credits arising from the purchase or sale are brought into account in computing the company's loan relationship profits on the basis on which these are recognised in its accounts in accordance with generally accepted accounting

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