CTM81585 - Groups: group relief: surrendering company not UK resident: amount of the loss: UK recomputation: loan relationships & derivative contracts

In order to quantify the loss eligible for relief, the foreign loss is to be recomputed in accordance with UK principles, (CTM81560).

All of the computational rules in Part 5 CTA 2009 need to be applied to arrive at profits or losses on loan relationships, and similarly the computational rules in Part 7 CTA 2009 need to be applied to arrive at profits or losses on derivative contracts.

This takes in not only the basic computational rules (found at CTA09/PT5/CH3 for loan relationships, and CTA09/S595 for derivative contracts) but in particular will include:

• Regulations made under powers contained in the loan relationships or derivative contracts legislation, for example the Disregard Regulations dealing with derivative contracts that hedge assets or liabilities.
• Any applicable special rules, such as anti-avoidance legislation.

The Corporate Finance Manual provides details of how to compute profits and losses arising on loan relationships and derivative contracts. Guidance on loan relationships is at CFM30000 onwards, and on derivative contracts at CFM50000 onwards.