CTM36900 - Transactions between dealing and non-dealing associated companies
ICTA88/S774 was aimed at transactions which attempt to exploit mismatches in tax treatment between a 鈥榙ealing company鈥�, that is a company carrying on a trade of dealing in securities, land or buildings, and an associated 鈥榥on-dealing company鈥�, defined as any company which is not a 鈥榙ealing company鈥�.
The section was not rewritten into CTA10 on the grounds that it is obsolete. Repeal was recommended to the Law Commission and the section was repealed by entry into Group 1 of Part 10 of Schedule 1 to the Statute Law (Repeals) Act 2013.
The Law Commission explained the repeal of ICTA88/S774 as justified on the basis of four factors
- TCGA92/S161 and S173, which deal with appropriation of assets held as trading stock
- TCGA09/PART5 to PART7, the loan relationships and derivative contracts provisions
- CTA09/S695, transfers of value between connected companies, in particular as regards abandoned options, and
- CTA09/S354, exclusion of debits for impaired or released connected companies鈥� debits 鈥� this would deny to a dealing company relief for loss in value of its loan to an associated non dealing company where the loan is written down due to lack of creditworthiness of the non-dealing company. CTA09/S464 gives priority to CTA09/PART5 which means ICTA88/S774 (1)(b) is superseded.
An archive copy of the guidance is available from CTIS (Technical).