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The interaction between FRS 102 and the new loan relationship legislation.
KEY POINTS
- HMRC is seeking to align the taxing of loan relationships more closely with the accounting treatment.
- FRS 102 changes for interest-free and non-market loans can create significant accounting adjustments in the year of transition.
- The interaction of FRS 102 with the amended loan relationship rules after January 2016 can create an asymmetric tax treatment.
- Draft Finance Bill 2016 changes aim to address some of the issues.
- The piecemeal introduction and amendment of legislation is likely to confuse.
When HMRC issued its consultation document Modernising the taxation of corporate debt and derivative contracts (tinyurl.com/p6okyd3) a key area for discussion centred on basing taxable amounts on accounting profit and loss. The updated loan relationship legislation was enacted in F(No 2)A 2015 Sch 7 and generally...
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