Section 481 — Corporation Tax Act 2009: Application of Part 5 to relevant non-lending relationships

Application of Part 5 to relevant non-lending relationships 481 1 If a company has a relevant non-lending relationship—

a Part 5 (loan relationships) applies in relation to the relevant matters (see subsections (3) and (5)) as it applies in relation to such matters arising under or in relation to a loan relationship, but b the only credits or debits to be brought into account for the purposes of that Part in respect of the relationship are those relating to those matters.

2 Accordingly, subject to subsection (1)(b), references in the Corporation Tax Acts to a loan relationship include a reference to a relevant non-lending relationship.

3 The relevant matters in the case of a relevant non-lending relationship within section 479 are—

a interest payable to or by the company in respect of the relevant non-lending relationship, b exchange gains or losses arising to the company as a result of the relationship, c in the case of a debt on which interest is payable to the company, profits (but not losses) arising to the company from any related transaction in respect of the right to receive interest, d in the case of a debt in relation to which an impairment loss or release debit arises to the company in respect of an unpaid business payment, the impairment or release, e in the case of a debt in relation to which a credit in respect of the reversal of an impairment loss arises to the company in respect of a previously unpaid business payment, the reversal and f in the case of a debt in relation to which a relevant deduction has been allowed to the company and which is released, the release.

4 In subsection (3)(d) and (e) “ business payment ” has the meaning given in section 479(3). 4A In subsection (3)(f) “ relevant deduction ” has the meaning given in section 479(3A).

5 The relevant matters in the case of a relevant non-lending relationship within section 480 are—

a the matters referred to in subsection (3),

b the discount arising to the company from the money debt, c profits (but not losses) arising to the company from any related transaction, d any impairment arising to the company in respect of the discount, and e any reversal of any such impairment.

6 Subsection (7) applies if a company—

a has a relevant non-lending relationship within section 479 because of a debt on which interest is payable to the company, but b enters into a related transaction in respect of the right to receive interest as a result of which interest is not so payable.

7 Even though the interest is not payable to the company, for the purpose of bringing credits into account in respect of that or any other related transaction as a result of the application of subsection (3)(c), the company is still treated as having a relevant non-lending relationship within section 479.

8 Section 480(5) (when discount arises) applies for the purpose of this section as it applies for the purposes of section 480.