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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Loan relationships: consortia companies and impairment: how the restriction works

When does Chapter 7 apply?

CTA09/S364 sets out when Chapter 7 applies. There must be

A ‘relevant consortium creditor’ relationship - that is a lender that is a member of a consortium that owns a ‘consortium company’ or a fellow group company of a consortium company, which

  • brings in or has previously brought in, an impairment loss or a debit for a release of the liability (a ‘release debit’) under the ‘relevant consortium creditor relationship’
  • in any ‘group accounting period’.

The consortium company (or if the consortium company is a holding company, a subsidiary of that company) is the borrower. 

See the example at CFM35630.

Consortium company

A consortium company is a company that falls within CTA10/Part5. It is a company owned by a consortium which is

  • a trading company owned directly by the consortium, or
  • a trading company that is a 90% subsidiary of a holding company owned directly by the consortium, or
  • a holding company owned directly by the consortium.

Group accounting period

A group accounting period is defined in CTA09/S370. It is any accounting period of the consortium member

  • beginning on or after 1 October 2002, or
  • corresponding to such an accounting period.

An accounting period of a group member will correspond with that of a consortium member if

  • the two accounting periods coincide, or
  • the consortium member’s accounting period includes more than half of the group member’s accounting period, or

the consortium member’s accounting period includes part of the group member’s accounting period, where the rest of the group member’s accounting period doesn’t fall within any accounting period of the consortium member.