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HMRC internal manual

Corporate Finance Manual

Loan relationships: a short guide: special rules

Special rules

If the computation shows adjustments in respect of

you will need to consult the full guidance.

Broadly, such computational adjustments are an exception to the normal ‘follow the accounts’ principle.

In the case of groups of companies, a loan relationship may be transferred between companies in the same group on a no profit/no loss basis, in a similar way to the intra-group transfer of assets for capital gains purposes.

Where companies are connected, the rules specify that loan relationships profits and losses must be computed using the amortised cost basis of accounting, and in general ‘impairment losses’ (bad debts), and the reversal of impairment losses, are not allowable or taxable.