Commentary

D1.750 Impairment relief for loan relationships

Corporate tax
Corporate tax | Commentary

D1.750 Impairment relief for loan relationships

Corporate tax | Commentary

Loan relationships—Impairment relief

D1.750 Impairment relief for loan relationships

The legislation described in this article only relates to liabilities under a loan relationship. Relief for bad and doubtful debts which do not constitute loan relationships (see D1.703) can only be allowed as trading deductions (see B2.410), a loss from a UK or overseas property business (see B6.203) or as a capital loss (under TCGA 1992, s 253, see C3.701–C3.706). HMRC has confirmed that, whilst trade debts are not loan relationships1, trade 'bad debts' are within the loan relationships rules2.

Where a company accounts for a loan relationship on an amortised cost basis and it is not connected with the other party to the loan relationship for the purposes of CTA 2009, s 466, it is able to claim relief for any impairment losses or losses arising from the release of all or part of the debtor company's obligations under a loan relationship on the basis in which these are reflected in its accounts. Where a company is accounting for a loan relationship using an amortised cost basis, it is able to obtain relief for any impairment provision that it recognises in its accounts in respect of the loan relationship. This would include provisions for expected credit losses made where a company is accounting for its loan relationships using IFRS 9. No relief is available for impairment losses or expected credit losses where the loan relationship is a

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