CFM1120 – Corporate Finance Manual – HMRC Internal Manual

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What does the Corporate Finance Manual contain?

The Corporate Finance Handbook begins with an explanation of the business and accounting background of corporate finance. It then explains the corporate tax rules on loan relationships, foreign exchange transactions and derivative contracts.

Understand corporate finance

CFM10000 onwards contain an overview of the business context of corporate finance. Use this section to find out how companies raise and invest money, how currency exchange differences arise, and how and why companies use derivatives.

Accounting

CFM20000 and following explain accounting rules in corporate finance. Use this section to learn about the accounting treatment of a company’s financial assets and liabilities, including foreign exchange contracts and derivative contracts.

Loan relationships

CFM30000 et seq. set out the tax rules on “lending relationships”, which are found in Part 5 of the Corporations Tax Act 2009. Use this section to find out what lending relationships are and how they work. are imposed, including rules on transactions between groups of companies and between related companies, certain specific types of companies such as investment funds and certain specific types of debt such as financing bonds.

Reputable lending relationships

CFM40000 et seq. explain the tax rules on transactions that do not fall under the main loan relationship rules, but are treated as loan relationships for tax purposes. The CFM calls them “reputable lending relationships”. These rules are found in Part 6 of the Corporation Tax Act 2009. Use this section to find out how the loan relationship rules apply to ‘monetary debt’, disguised interest, holdings in investment funds, ‘alternative’ (Islamic) finance, ‘shares as debt” and pensions.

Derivative contracts

CFM50000 et seq explain the tax rules on derivative contracts, which are found in Part 7 of the Corporation Tax Act 2009. Use this section to learn about the corporate tax rules that apply to forwards, futures, options and swaps. This section also includes advice on “coverage” and “non-compliance regulations”.

Currencies and accounts denominated in foreign currency

CFM60000 and following explain the tax rules on foreign exchange (“forex”) and accounts established in a foreign currency. Use this section to learn more about corporate tax rules regarding matching.

Other corporate debt tax rules

Although the main body of corporate debt tax rules are found in Parts 5 to 7 of the Corporations Tax Act 2009, some rules are found in other statutes. CFM70000 has details. Use this section to learn about special tax rules that apply to banks and building societies, securitization companies, structured finance, manufactured payments, tax deduction, changes in accounting practice, transfers of income streams and group mismatch.

Old versions of legislation

The legislation relating to each of the three main subjects has undergone a number of changes over the years. CFM80000 gives advice on the first versions of the rules.

Debt ceiling

CFM90000 explains the debt ceiling tax rules, which are found in Part 7 of the Taxation (International and Other Provisions) Act 2010. These rules only apply to Global Group account periods ending before (or overlapping) April 1, 2017. Use this section to learn which groups are affected by the debt cap and how to calculate and account for denials and exemptions. For later account periods, see CFM95000 which explains the new rules on the restriction of corporate interests.

Restriction of corporate interests

CFM95000 explains the tax rules relating to the restriction of corporate interests which are found in Part 10 of the Taxation (International and Other Provisions) Act 2010. These rules only apply to Global Group Account Periods beginning on or after (or overlapping) April 1st. 2017. Use this section to find out which groups are affected by the corporate interest restriction rules, how these rules are administered, how denials are calculated, and to find details of any special or transitional rules that may apply.

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