Section FM 18 — Income Tax Act 2007: Financial arrangements: transfer from company A to company B

FM 18 Financial arrangements: transfer from company A to company B When this section applies (1) This section applies in an income year in which a company ( company A ) transfers a financial arrangement to which the financial arrangements rules apply to another company ( company B ) when— (a) company A and company B are in the same consolidated group for the whole of the income year; and (b) the method of calculating income and expenditure from the financial arrangement does not change after the transfer, and the consolidated group’s return of income is made on that basis; and (c) neither company A nor company B is entitled to use under sections IA 4 and IA 5 (which relate to the use of loss balances by companies) a loss balance carried forward unless subpart ID (Use of tax losses by consolidated groups) applies. Treatment of companies (2) In the year of transfer and in later income years,— (a) company A is treated as if it had never been a party to the financial arrangement, and section EW 31 (Base price adjustment formula) does not apply: (b) company B is treated as if it had taken all the actions that company A undertook before the transfer in entering into the financial arrangement, incurring expenditure and deriving income, and providing its return of income in relation to the financial arrangement. Relationship with sections EW 38 and GB 21 (3) This section overrides sections EW 38 (Consideration when disposal for no, or inadequate, consideration) and GB 21 (Dealing that defeats intention of financial arrangements rules). Defined in this Act: company , consolidated group , financial arrangement , financial arrangements rules , income , income year , loss balance , return of income , Compare: 2004 No 35 s FD 10(4), (4A)