This snapshot, taken on
, shows web content acquired for preservation by The National Archives. External links, forms and search may not work in archived websites and contact details are likely to be out of date.
The UK Government Web Archive does not use cookies but some may be left in your browser from archived websites.

CTM56705 - Loan relationships: miscellaneous: for unallowable purposes: general

FA96/SCH9/PARA13 is an anti-avoidance provision. Anti-Avoidance Group (Investigation) has operational responsibility for the domestic operation of this provision.

The provision disallows any debits where in an accounting period a loan relationship has an unallowable purpose. However, it disallows them only to the extent that, on a just and reasonable apportionment, the debits relate to the unallowable purpose.

For an accounting period, a loan relationship has an unallowable purpose if a company is party to it or has entered into a related transaction in relation to it for an unallowable purpose. (FA96/SCH9/PARA13 (2)). The term ‘related transaction’ is defined in FA96/S84. It can therefore potentially apply to any debits, for instance, representing:

  • interest payable or accrued due,
  • accrued discount,
  • a decrease in the value taken into account under an authorised mark to market basis,
  • the creation or increase in a provision in respect of or the writing off of a bad doubtful debt,
  • the release of a debt,
  • a loss on ceasing to be party to a debt, whether by disposal or otherwise.

However, it can only apply to the extent that, on a just and reasonable apportionment, the debit is attributable to the unallowable purpose.