beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

International Manual

Interest imputation: transfer pricing the lender: treatment of exchange differences

Where transfer-pricing rules operate to impute interest (or a higher rate of interest) on the whole of an outward loan, all the exchange rate gains and losses continue to be recognised in full. However, because of CTA09/S447-S452 (previously FA96/SCH9/PARA11A), exchange gains or losses on creditor loan relationships are to be disregarded only where, and to the extent that, the loan fulfils an equity function.

For further information see CFM38100.