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HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
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UK residents with foreign income or gains: corporation tax: Loan relationships

The loan relationship legislation contained in Part 5 of CTA 2009 applies for the purposes of Corporation Tax. Detailed guidance on the legislation can be found at CFM30000 onwards. Various sections of TIOPA10 are concerned with the implications of the legislation for double taxation relief, some of which are mentioned at

INTM163070 - accrued income

INTM167090 - apportion deductions

INTM168000 onwards - banks and others lending by way of trade - and see INTM168090.

The paragraphs immediately following contain the main body of guidance on this subject.

Subject to INTM167150 onwards, TIOPA10/S37 will operate as before where foreign tax is paid on interest which is taken into account as, or as part of, a credit on a trading loan relationship (INTM168000 onwards).

There are two circumstances in which the rules in TIOPA10/S108 (INTM167210) will operate to restrict relief for foreign tax

  • in the accounting period in which a security is acquired: relief may not be given for foreign tax on the next interest payment to the extent that it is attributable to the interest which accrued before the company acquired the security
  • in the accounting period in which a security is sold: relief may not be given for foreign tax suffered on the next interest payment to the extent that it is attributable to the interest which accrues after the company disposed of the security.