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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: structured finance: accounting practice and accounts

Accounting issues

Section 774 (2)-(4) deal with accounting practice and accounts. References to accounts include the consolidated group accounts of a group of companies of which the relevant person is a member under subsection (2) and subsection (3) introduced by FA 2007 determines the period of account in which an advance is received. Subsection (4) provides that if accounts are not drawn up in accordance with GAAP the sections apply as if they were. GAAP, in this case, includes both UK GAAP and International Accounting Standards - see FA04/S50. In the case of UK GAAP it will often be FRS5 (accounting for the substance) which provides that a structured financing arrangement is accounted for as a financial liability.

CTA10/SCH1/PARA600 ensures that the lease premium rules in CTA09/S209 to 213 (corporation tax) and ITTOIA05/S277 to S281 (income tax) do not apply in a case where a disposal of a security consists of the grant of a lease at a premium where the conditions in section 758 or 763 are met.