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Financial trader exemption

This guidance applies only to accounting periods starting before 1 January 2005

FA96/S88 defined exempt circumstances for creditor relationships (debt assets) only, held either directly or through a series of loan relationships. So when the creditor company was connected to the debtor in exempt circumstances, you ignored the connection. »Ê¹ÚÌåÓýapp company therefore did not have to

• apply the accruals basis
• follow the other provisions that apply to connected persons.

»Ê¹ÚÌåÓýapp debtor company would still have had to apply the connected persons rules (FA96/S88(5)).

»Ê¹ÚÌåÓýapp exemption existed to avoid penalising companies that were genuinely dealing in debt. For example a company dealing in securities may also be a subsidiary of a bank. It could deal in the bank’s loan notes in exactly the same way as it deals with loan notes of other companies.

»Ê¹ÚÌåÓýapp financial trader exemption remains broadly the same. »Ê¹ÚÌåÓýapp current rules are explained at CFM35130 onwards.

Conditions for the exemption

»Ê¹ÚÌåÓýapp conditions for the exemption that applied to a company are explained at CFM81050.

»Ê¹ÚÌåÓýapp conditions for exemption that applied to the debt are explained at CFM81060.