Introduction Background
6.The legislation relating to the taxation of corporate debt is contained in Part 5 of the Corporation Tax Act 2009 (CTA 2009) which applies to loan relationships. Amounts brought into account as credits and debits for the purposes of these rules are those recognised in determining a company’s profit and loss in accordance with generally accepted accounting practice.
7.It is possible that taxable loan relationship credits might arise where a company makes a payment into a decommissioning security settlement to meet future decommissioning costs. Where these funds are invested and earn interest the income may be taxed twice, once on the decommissioning security settlement and also as a loan relationship credit of the company.
8.This section ensures loan relationship credits and debits are not treated as arising for the purposes of Part 5, Chapter 3, CTA 2009 to a company where they arise in relation to a decommissioning security settlement.
9.The amendments made by this section form part of the Government’s wider package of measures to provide greater certainty in respect of decommissioning tax relief, remove barriers to the transfer of licence interests and increase capacity for additional investment in the UK Continental Shelf.