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HMRC internal manual

Corporate Finance Manual

Deemed loan relationships: disguised interest: no double counting

Anti-double counting rule

CTA09/S486B(7) is an anti-double counting rule to ensure that any amount brought into account in computing a return to which the Chapter applies cannot be brought into account under any other tax provision.

The operation of section 486B(7) is easiest to visualise in the context of a simple transaction involving just one element-for instance, an investment in a share that increases in value in an interest-like way. To the extent that Chapter 2A applies to the appreciation in value of the share, that element will be excluded from a subsequent chargeable gains computation.

In some cases, a return brought into account in accordance with Chapter 2A may be composed of a number of elements some of which would otherwise be tax nothings and some of which would otherwise be taxed as income or brought into account in computing income. CFM42120 has an example. In such cases then to the extent that the otherwise taxable (or tax deductible) income has been taken into account in computing the return, section 486B(7) prevents the amount being taken into account again.