CFM33020 - Loan relationships: core rules: 'The matters'

CTA09/S306A

The loan relationship rules provide an exclusive regime for the taxation of corporate debt. The scope of the regime, referred to as the 'matters' are set out in S306A. These are:

(a) profits and losses of the company that arise to it from its loan relationships and related transactions (excluding interest or expenses)

(b) interest under those relationships

(c) expenses incurred by the company under or for the purposes of those relationships and transactions

The regime typically looks to generally accepted accounting practice to determine the amounts to be brought into account in respect of these matters.

Pre-2016 periods

S306A was introduced in F(No.2)A15 as part of the 2016 changes to the loan relationship rules. The amendments made by F(2)A15 did not fundamentally amend the scope of the loan relationships provisions. But the provisions are now drafted so as to make a clear distinction between the matters that are within the ambit of the provisions and the way in which the amounts brought into account should be quantified.

Previously these were combined as part of the 'fairly represents' test

Further guidance

CFM31010 - meaning of loan relationship

CFM31075- meaning of a related transaction

CFM33030 - meaning of interest

CFM33050 - other types of profits and losses on a loan relationship

CFM33060 - expenses that are allowable under the loan relationship rules

CFM33070 - following the accounts

CFM33160 - pre-2016 rules