Q&As

Section 322(4) of the Corporation Tax Act 2009 (CTA 2009) provides that credits related to a debt/equity swap are ignored. Would this be different if the loan was denominated in a foreign currency (and discharged with shares expected to be equivalent in value). Normally, credits and debits are brought into account under the loan relationship rules for forex gains and losses at the end of an accounting period or on repayment of the loan. However, does CTA 2009, s 322(4) prevent this from happening where the loan is discharged for shares?

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Published by a ½Û×ÓÊÓƵ Tax expert
Published on: 10 April 2025
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We have assumed that the debtor company is unconnected with the creditor for the purposes of the loan relationships rules, applies an amortised cost basis of accounting to the loan in the relevant period, that the loan is not hedged, and that there is no release of ‘relevant rights’ (within the meaning of section 358 of the Corporation Tax Act 2009 (CTA 2009)).

The starting position is that a company is required to bring profits and losses arising from its loan relationships and related transactions into account for corporation tax purposes

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