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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Other tax rules on corporate finance: layout of the guidance

CFM70010 explains that certain tax rules relating to corporate debt are to be found outside the main body of the loan relationships and derivative contracts legislation in Parts 5 to 7 CTA09. The guidance on these is set out as follows.

Exemptions from loan relationships

Part 19 of CTA09 sets out exemptions from corporation tax. These exemptions include a number of types of income that would otherwise be taxable under the loan relationships rules. CFM70100 has more details.

Banks and building societies

CFM71000 explains particular rules for banks and building societies, on dormant accounts, unclaimed assets, and on transfers of building society business.

Securitisation companies

There are particular rules governing the taxation of certain types of company involved in securitisations. See CFM72000.

Structured finance

Rules on ‘structured finance arrangements’ were introduced by FA 2006. These rules treat certain arrangements that have the economic effect of lending as if they were loan relationships. See CFM73000.

Stock lending and manufactured payments and repos

Stock lending is a financial arrangement that involves the transfer of securities. It is similar in form to sale and repurchase arrangements (‘repos’) that are a form of secured loan. The loan relationships tax rules that apply to repos are explained in CFM46000.

CFM74000 explains the tax rules on stock lending, and the ‘manufactured payments’ that are a feature of both stock lending and repos.

Deduction of tax

Deduction of tax is required from certain payments of interest and annual payments. CFM75000 sets out these rules.

Changes of accounting practice

Regulations have been made to ensure that certain amounts arising on the transition to International Accounting Standards are brought into account (or deferred, or exempt from being brought into account. See CFM76000.

Transfers of income streams

Legislation to counter the selling of an income stream to try to turn economic income into a capital return was enacted in FA 2009. See CFM77000.

Financial arrangements equivalent to lending, and leasing

Many types of financial arrangement are economically equivalent to lending but take a different legal form - see for example CFM44000 on ‘alternative finance’. Leasing is another way that companies can finance their activities. Guidance on leasing is to be found in the Business Income Manual (BIM61000).

Group mismatch schemes

The group mismatch rules apply where two or more companies are members of a group and are party to a group mismatch scheme, where the scheme is entered into to obtain the change of securing a relevant tax advantage. See CFM77500+.