CFM81330 - Old rules: loan relationships: consortia and bad debts: conditions for Para 5A

When did the Para 5A restriction apply?

This guidance applies to periods of account beginning before 1 January 2005

FA96/SCH9/PARA5A applied where a lender company brought in, or had previously brought in, a bad debt under the authorised arrangements for bad debts, and where the following conditions were met:

The lender was a company that was either

  • a member of a consortium that owned a consortium company, or
  • a fellow group company of a consortium member

in any group accounting period. (See CFM35620 for a definition of 바카라 사이트˜consortium company바카라 사이트™.)

This condition was given by Para 5A(2).

The borrower was

  • the consortium company, or
  • if where the consortium company is a holding company, then a subsidiary of that company.

This condition was given by Para 5A(3).

Definition of group accounting period

A group accounting period was defined in Schedule 9 Para 5A(17) FA 1996 as any accounting period of the consortium member

  • beginning on or after 1 October 2002, or
  • corresponding to such an accounting period.

An accounting period of a group member would correspond with that of a consortium member if

  • the two accounting periods coincided, or
  • the consortium member바카라 사이트™s accounting period included more than half of the group member바카라 사이트™s accounting period, or
  • the consortium member바카라 사이트™s accounting period includes part of the group member바카라 사이트™s accounting period, where the rest of the group member바카라 사이트™s accounting period doesn바카라 사이트™t fall within any accounting period of the consortium member.

See CFM35620 for a current definition.

When the Para 5A restriction applied: example

FD Ltd was a consortium company. It was owned

  • 40% by RT plc, the holding company of a large group
  • 40% by WD Ltd, a subsidiary of KX plc
  • 20% by MC Ltd, a singleton company.

Any amount that was written off a loan made by

  • RT plc (consortium member) or any of its subsidiaries (group members)
  • WD Ltd (consortium member), its holding company or any of its fellow group members, or
  • MC Ltd (consortium member)

to FD Ltd, or if FD Ltd was a holding company, any subsidiary (within S402(3)(b) ICTA 1988) of FD Ltd, would fall within FA96/SCH9/Para 5A.