Section 452 Exchange gains and losses where loan not on arm's length termsC1

United Kingdom

(1)

This subsection applies if—

F1(a)

a company would be treated as having a debtor relationship, or would be treated as borrowing more under an existing debtor relationship, in relation to an accounting period if—

(i)

an election were made under section 153B(2) of TIOPA 2010 in relation to that period,

(ii)

a claim were made under section 192(1) of that Act in relation to that period, or

(iii)

such an election and such a claim were made in relation to that period, and

(b)

for that period there is a connection between that company and the company that would have the corresponding creditor relationship.

(2)

If subsection (1) applies, it is assumed that such a F2election, claim or election and claim is made for the purpose of determining the debits or credits to be brought into account for the purposes of this Part in respect of any exchange gains or losses arising in that period in respect of the liability representing that debtor relationship.

F3(3)

Subsections (4) and (5) apply if, because of F4one or more elections or claims made under section 153B(2) or 192(1) of TIOPA 2010 or assumed to have been made as a result of subsection (2)—

(a)

one company is treated for any purpose as having a debtor relationshipF5, or is treated as borrowing more under an existing debtor relationship, or

(b)

more than one company is treated for any purpose as having a debtor relationship represented by the same liability.

(4)

The total amount of the credits brought into account for the purposes of this Part in respect of exchange gains F6from that debtor relationship (in a subsection (3)(a) case) or from those debtor relationships F7(in a subsection (3)(b) case) must not exceed the total amount of the F8exchange gains or the proportion of the exchange gains to be left out of account F9... by the F10borrower in respect of the loan relationship F11as a result of Part 4 of TIOPA 2010.

(5)

The total amount of the debits brought into account for those purposes in respect of exchange losses F12from that debtor relationship (in a subsection (3)(a) case) or from those debtor relationships F13(in a subsection (3)(b) case) must not exceed the total amount of the F14exchange losses or the proportion of the exchange losses to be left out of account F15... by the F16borrower in respect of the loan relationship F17as a result of Part 4 of TIOPA 2010.

F18(5A)

In this section “F19borrower” is to be construed in accordance with section 191(1)(a) of TIOPA 2010.

(6)

Section 466 (companies connected for an accounting period) applies for the purposes of this section.

Annotations

Textual amendments

F1: S. 452(1)(a) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(a), 32(1) (with Sch. 6 para. 32(3))
F2: Words in s. 452(2) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(b), 32(1) (with Sch. 6 para. 32(3))
F3: S. 452(3) substituted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(2)
F4: Words in s. 452(3) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(c)(i), 32(1) (with Sch. 6 para. 32(3))
F5: Words in s. 452(3)(a) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(c)(ii), 32(1) (with Sch. 6 para. 32(3))
F6: Words in s. 452(4) inserted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(3)(a)
F7: Words in s. 452(4) inserted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(3)(b)
F8: Words in s. 452(4) substituted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(3)(c)
F9: Words in s. 452(4) omitted (for chargeable periods commencing on or after 1.1.2026) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(d)(i), 32(1) (with Sch. 6 para. 32(3))
F10: Word in s. 452(4) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(d)(ii), 32(1) (with Sch. 6 para. 32(3))
F11: Words in s. 452(4) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(d)(iii), 32(1) (with Sch. 6 para. 32(3))
F12: Words in s. 452(5) inserted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(4)(a)
F13: Words in s. 452(5) inserted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(4)(b)
F14: Words in s. 452(5) substituted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(4)(c)
F15: Words in s. 452(5) omitted (for chargeable periods commencing on or after 1.1.2026) by virtue of Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(e)(i), 32(1) (with Sch. 6 para. 32(3))
F16: Word in s. 452(5) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(e)(ii), 32(1) (with Sch. 6 para. 32(3))
F17: Words in s. 452(5) inserted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(e)(iii), 32(1) (with Sch. 6 para. 32(3))
F18: S. 452(5A) inserted (with effect in accordance with Sch. 7 para. 12 of the amending Act) by Finance Act 2016 (c. 24), Sch. 7 para. 9(5)
F19: Word in s. 452(5A) substituted (for chargeable periods commencing on or after 1.1.2026) by Finance Act 2026 (c. 11), Sch. 6 paras. 30(3)(f), 32(1) (with Sch. 6 para. 32(3))

Modifications

C1: Pt. 5 modified by 2007 c. 3, s. 809FZZ(9) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))

Notes on Part 5

Modifications

C1: Pt. 5 applied (with effect in accordance with Sch. 24 paras. 13-16 of the amending Act) by Finance Act 2009 (c. 10), Sch. 24 para. 15(2)(3)
C2: Pt. 5 applied (with modifications) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 990(5), 1184(1) (with Sch. 2)
C3: Pt. 5 modified (15.11.2011 for specified purposes, 30.3.2012 for E.W.) by Localism Act 2011 (c. 20), ss., 240(5)(o), Sch. 24 para. 5; S.I. 2012/628, art. 3(b)
C4: Pt. 5 modified (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 2; S.I. 2011/2576, art. 5
C5: Pt. 5 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
C6: Pt. 5 modified (30.9.2013) by The BRB (Residuary) Limited (Tax Consequences) Order 2013 (S.I. 2013/2242), arts. 1, 7
C7: Pt. 5 modified (with effect in accordance with reg. 1(2)(3) of the amending S.I.) by The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209), regs. 1(1), 11(3)-(6)
C8: Pt. 5 modified by 2010 c. 4, s. 356NC(1)-(4) (as inserted (1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6)
C9: Pt. 5 modified by 2010 c. 4, s. 356NB(1)-(4) (as inserted (1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6)
C11: Pt. 5 modified by 2010 c. 4, s. 676AG(1) (as inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 75)
C12: Pt. 5 modified (for the tax year 2026-27 and subsequent tax years (but in relation to investment management services whenever performed)) by 2005 c. 5, Sch. A1 para. 35(7) (as inserted by Finance Act 2026 (c. 11), s. 58(6), Sch. 11 para. 1)