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HMRC internal manual

Corporate Finance Manual

Loan relationships: the matters and computational rules: amounts not brought into account


There are a number of circumstances where amounts that are recognised in accordance with generally accepted accounting practice, and arise as a consequence of the release of the debt under a debtor loan relationship, are not brought into account.

Changes were made to the legislation in F(No.2)A15, with effect for certain events that take place on or after 1 January 2015. The guidance in the following pages covers the current position and the position before these changes took effect.


For a credit not to be brought into account, the release must take place in an accounting period where an amortised cost basis of accounting is applied, for tax purposes, in respect of that relationship.

Then, one of the following conditions, A to E must be met. These conditions are:

  • Condition A: debt is released as part of a statutory insolvency arrangement (CFM33190);

  • Condition B: debt is released where there is a debt-for-equity swap (CFM33200 to CFM33205);

  • Condition C: debt is released where certain insolvency conditions are met, not necessarily involving a statutory insolvency arrangement, and the debtor relationship concerned is not a connected parties relationship (CFM33190);

  • Condition D: debt is released as a result of a stabilisation power under the Banking Act 2009;

  • Condition E: debt is released as part of a corporate rescue (CFM33191 to CFM33195);

There is also a relief, essentially the same as that provided for by condition E, where debts are substantially modified, CTA09/S323A (CFM33196 - CFM33198).