Section 420 — Corporation Tax Act 2009: Assumptions where options etc apply

Assumptions where options etc apply 420 1 This section applies if—

a the answer to any question specified in subsection (2)—

i depends on the exercise of an option by a party to a loan relationship (“A”) or A's associate, or ii is otherwise under the control of A or A's associate, and b an amortised cost basis of accounting applies for an accounting period.

2 The questions are—

a whether any amount will become due under the relationship after the period ends, b how much will become due under it after the period ends, and c when after the end of the period an amount will become due under the relationship.

3 In determining the credits and debits to be brought into account for the accounting period in accordance with an amortised cost basis, the assumption in subsection (4) is to be made.

4 The assumption is that A or A's associate will exercise the power to determine whether and on what date any amount will become due in the way which appears to be the most advantageous to A.

5 That way is to be determined—

a as at the end of the accounting period, and b ignoring taxation.