Debt cap: intra-group short-term debt: example of practical application
Example of short-term loan relationships
A group is considering whether the following loans will be short-term loan relationships for the accounting period of the worldwide group for the 12 months ended 31 December 2014. All of the loans are between members of the group.
Which of these are short-term loan relationships, and if so which condition or conditions are met?
|Loan||Condition 1 - Fixed-term of less than 12 months, not terminated in 2014||Condition 2 - Loan terminated within 12 months in 2014||Condition 2 - Loan terminated within 12 months after 2014||Short-term LR for 2014 AP|
All of the loans, apart from D and E, are treated as short-term loan relationships for the year ended 31 December 2014. The group companies can make elections to treat amounts payable in respect of the loans A, B, C, F, G and H as not being financing expense amounts for the year ended 31 December 2014. The companies will be able to make elections for the first five of these loans at the end of the accounting period. They will not be able to make an election for loan H until it actually terminates in the year ended 31 December 2015.