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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Derivative contracts: departures from accounts: statutory insolvency arrangements

Release of liability in insolvency

Where a company is in a statutory insolvency arrangement, the counterparty to a derivative contract may release amounts due to be paid under the contract. CTA09/S611 ensures that this does not give rise to a taxable credit for the insolvent company - any resultant credit in the company’s accounts is disregarded.

‘Statutory insolvency arrangement’ is defined at CTA10/S1119 and explained at CFM33190.