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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Deemed loan relationships: shares accounted for as liabilities: commencement

Commencement

The shares accounted for as liabilities rules brought in by FA2009 will apply as follows:

Shares held on or after 22 April 2009

Any shares held by a company on or after 22 April 2009 are capable of being within the shares accounted for as liabilities rules.

Any shares acquired that were:

  • held before 22 April 2009, and
  • were still held on 22 April 2009, but
  • in relation to which FA96/S91D did not apply before 22 April 2009 is treated as an arrangement to which the company became party on 22 April 2009.

This means that the arrangement is treated as a new arrangement, with the result that it can then be tested against the requirements of Chapter 6A such that the returns arising on or after 22 April may then be brought into account under Chapter 6A.

But this rule does not apply in the following two circumstances:

  • if immediately before 22 April 2009 a company held a share to which FA96/S91D applied (CFM45200) and on 22 April CTA09/S521B (CFM45530) began to apply;
  • if immediately before 22 April 2009 a company held a share to which FA96/S91D did not apply only by virtue of the share not being designed to produce a return which equated in substance to a return at a commercial rate of interest, and on 22 April CTA09/S521B (CFM45530) began to apply.

Where a share was held immediately before 22 April 2009 to which section 91D did not apply (other than by virtue of not being designed to produce a return at a commercial rate of interest) and on 22 April section 521B began to apply, then for the purpose of the charge to corporation tax on chargeable gains TCGA92/S116B will treat the share as having been disposed immediately before that time for consideration of an amount equal to the notional carrying value of the share at that time. It will also come into the loan relationship regime at that value.