CFM4000 - Accounting for loan relationships: Home page

Overview

This part of the guidance is intended to give HMRC staff an overview of the way loan relationships may be presented in company accounts. It is illustrative, rather than comprehensive, concentrating on the more straightforward transactions undertaken by both borrowers and lenders.

HMRC staff should always first ask the advice of a local compliance accountant if the treatment of a loan relationship in the accounts is not clear. However, although the tax legislation (see CFM15000) broadly follows the accounting treatment, it is prescriptive in many areas about how accounting methods should be applied, and overrides the accounting treatment in other areas.

From 1 January 2005, the EU requires all listed companies to prepare their consolidated financial statements in accordance with International Accounting Standards. In addition, the UK Accounting Standards Board (ASB) is proposing, through FRED 30, to introduce large elements of IAS 32 (the standard dealing with disclosure and presentation of financial instruments) and IAS 39 (dealing with recognition and measurement) into UK GAAP. Comprehensive guidance on these standards is at CFM16000 onwards.

This section of the guidance deals only with UK GAAP as it stood before 1 January 2005. You should not use it for periods covered by the new accounting standards.

Contents List CFM4050