Section 435 — Corporation Tax Act 2009: Reorganisations involving loan relationships

Reorganisations involving loan relationships 435 1 This section applies if—

a sections 127 to 130 of TCGA 1992 (reorganisations: equation of original shares and new holding)—

i apply in relation to a reorganisation, or ii would so apply but for section 116(5) of that Act (which disapplies those sections where the original shares or the new holding consists of or includes a qualifying corporate bond),

b the original shares consist of or include an asset representing a loan relationship, and c section 433 or 434 applies in relation to a transfer in the course of the merger in which the reorganisation occurs or, in a case where those sections would apply apart from condition D in section 431 not being met, condition G in that section is met in relation to such a transfer.

2 For the purposes of this Part such debits and credits are to be brought into account as would be brought into account if the reorganisation were a disposal of the asset representing the loan relationship for consideration of an amount equal to its notional carrying value.

3 For the purposes of this section, the notional carrying value of that asset is the amount which would have been its tax-adjusted carrying value based on the accounts of the original holder if a period of account had ended immediately before the date when the reorganisation occurred.

4 In this section— ... “ original holder ” means a person holding the original shares immediately before the reorganisation, “ original shares ” has the meaning given by section 126(1) of TCGA 1992 (application of sections 126 to 131 of that Act), and “ reorganisation ” includes anything to which sections 127 to 130 of that Act apply as if it were a reorganisation.

5 This section is subject to—

a section 436 (original holder using fair value accounting),

and b section 438 (disapplication of Chapter where transparent entities involved).