Corporation Tax Act 2009 section 311

Amounts not fully recognised for accounting purposes: introduction

Section 311 introduces the circumstances in which special rules apply to determine the credits and debits a company must bring into account when, as a result of tax avoidance arrangements, amounts relating to a creditor loan relationship are not fully reflected in the company's accounts.

• The section applies where a company is a party to a creditor relationship in a period and, because of tax avoidance arrangements, an amount relating to that relationship is either entirely omitted from or only partially reflected in its profit or loss under generally accepted accounting practice
• An amount is considered "not fully recognised" if either nothing at all is recognised in the company's profit or loss for the period in respect of the relationship, or only part of the relationship is recognised
• "Tax avoidance arrangements" are defined broadly as any arrangement, scheme or understanding — whether legally enforceable or not, and whether involving one or more transactions — where a main purpose of any party in entering into it is to obtain a tax advantage
• A company is still treated as a party to a creditor relationship even if it has transferred its rights to another person under a repurchase or stock lending arrangement, or under a transaction that is not regarded as a disposal because it involves a mortgage or charge