Corporation Tax Act 2009 section 521F

Shares becoming or ceasing to be shares to which section 521B applies

Section 521F deals with the tax consequences when shares held by an investing company begin or cease to qualify for treatment as loan relationships under the alternative finance arrangements rules in section 521B.

• When shares enter or exit the section 521B regime, the investing company is treated as having disposed of and immediately reacquired them for Part 5 (loan relationships) purposes
• Both the deemed disposal and the deemed reacquisition are treated as taking place at the share's "notional carrying value" — meaning no gain or loss typically arises on the transition
• The notional carrying value is the tax-adjusted carrying value the share would have had in the company's accounts if a period of account had ended immediately before the change in status
• A change in status may be triggered by various events, such as the share beginning or ceasing to be accounted for as a liability, a change in connected party status, or the share beginning or ceasing to be held for an unallowable purpose