Commentary

D1.767 Loan relationships—Groups of companies

Corporate tax
Corporate tax | Commentary

D1.767 Loan relationships—Groups of companies

Corporate tax | Commentary

D1.767 Loan relationships—Groups of companies

Special rules apply where:

  1.  

    •     a company (A) which is a party to a loan relationship is replaced directly or indirectly by another company (B), where the two companies are members of the same group and are within the charge to corporation tax1. For this purpose a group is a parent company and its 75% subsidiaries2. In addition, regulations were introduced (with effect from 1 January 2010) dealing with the tax consequences of 'relevant transfers' between Northern Rock plc, or a wholly owned subsidiary ('ACo'), and Gosforth Subsidiary No1 plc, or a wholly owned subsidiary ('BCo'). Alongside other specific corporate and capital gains provisions, these regulations provide that there is continuity of treatment in relation to loan relationships transferred by a relevant transfer so that, for the purposes of CTA 2009, ss 335–347 (Pt 5, Ch 4), ACo and BCo are to be treated as if they were members of the same group3

  2.  

    •     a replacement occurs as a result of a series of transactions which have the same effect as a related transaction between A and B where each of A and B was a member of the same group at any time in the course of the series of transactions4. This could be a back-to-back arrangement or a novation of a debt or

  3.  

    •     B becomes a party to a loan relationship under which5:

    1.  

      –     its rights are equivalent to those of a loan relationship to which A has ceased to be a

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