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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate debt: group mismatch schemes: schemes involving repos, quasi-repos or finance arrangements

CTA10/S938I and CTA10/S938J ensure that the GMS rules can apply to transactions that are treated as a loan relationship by just one party - the borrower under a repo or structured finance arrangement.

Where the ‘advance’ under such arrangements has been received directly or indirectly by a company from a member of the same group then the test of whether amounts corresponding to the debtor’s company’s debits have been taxed symmetrically is carried out not just by reference to Part 5 but any other provision of the Corporation Tax Acts under which amounts may have been subject to the charge to tax on income (for instance, under CTA09/Part 3, trading income). In any such cases, the group mismatch rules are to apply as if those amounts were, or were not, brought into account under Part 5.

The reference to Corporation Tax Acts means the enactments relating to the taxation of the income and chargeable gains of companies and of company distributions (including provisions relating to income tax).