Corporation Tax Act 2009 section 611

Release under statutory insolvency arrangement of liability under derivative contract

Section 611 provides that a company does not have to recognise a taxable credit when a liability under a derivative contract is released as part of a statutory insolvency arrangement.

• When a company's liability under a derivative contract is released, this would normally generate a taxable credit for corporation tax purposes.
• Section 611 provides an exemption from this rule where the release forms part of a statutory insolvency arrangement.
• A statutory insolvency arrangement refers to formal insolvency procedures under the Insolvency Act 1986 or equivalent legislation with similar effect.
• The practical result is that companies undergoing formal insolvency proceedings are not taxed on the forgiveness of amounts they owe under derivative contracts.