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HMRC internal manual

Corporate Finance Manual

Loan relationships: computational rules: credits and debits not brought into account: amounts written off government investments

Write off of government investments

Where the government lends money out of public funds, and then writes it off, under CTA09/S326 the company is not required to bring in the release as a credit. This is because other legislation, in ICTA88/S400, restricts the company’s losses by the amount written off (CTM04400). This is one of the few occasions when other legislation overrides the loan relationships legislation.

You will come across this most often in cases involving large government or PFI contracts.