Section FO 12 — Income Tax Act 2007: Financial arrangements: resident’s restricted amalgamation, companies in wholly-owned group

FO 12 Financial arrangements: resident’s restricted amalgamation, companies in wholly-owned group When this section applies (1) This section applies, despite sections EW 42 and GB 21 (which relate to non-market transfers of financial arrangements) in an income year in which the obligations that an amalgamating company has under a financial arrangement pass to the amalgamated company on a resident’s restricted amalgamation when,— (a) the financial arrangements rules apply to the financial arrangement; and (b) for the whole of the income year before the amalgamation, the amalgamating company and the amalgamated company were part of the same wholly-owned group of companies; and (c) the method of calculating income and expenditure from the financial arrangement does not change after the amalgamation, and the amalgamated company’s return of income for the corresponding tax year is made on this basis; and (d) sections IA 3 to IA 6 and subpart ID (which relate to tax losses of companies and consolidated groups) do not apply to allow the amalgamating company to carry a loss balance forward from an earlier tax year for use in the tax year corresponding to the income year unless section IE 2 (Treatment of tax losses by amalgamating company) applies when the tax losses are those of the consolidated group. Amalgamated company’s election (2) The amalgamated company may choose to apply subsections (3) and (4) in their return of income for the corresponding tax year. Treatment of amalgamating company (3) The amalgamating company is treated as if it had never been party to the financial arrangement. Section EW 31 (Base price adjustment formula) does not apply, in relation to the transfer of the financial arrangement or the obligations under it. Treatment of amalgamated company (4) The amalgamated company is treated as if it had taken the place of the amalgamating company in relation to the financial arrangement in terms of— (a) the date the company entered into the arrangement; and (b) the consideration paid; and (c) the income derived; and (d) the expenditure incurred; and (e) the returns of income provided. Defined in this Act: amalgamated company , amalgamating company , consideration , consolidated group , corresponding income year , financial arrangement , financial arrangements rules , income , income year , loss balance , resident’s restricted amalgamation , return of income , tax loss , tax year , wholly-owned group of companies , Compare: 2004 No 35 ss FE 6(5), (6) , FE 7(1)(a), (2)