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Typically, the amounts to be brought into account by a company as credits and debits for any period for loan relationship purposes are those that are recognised in determining the company's profit or loss for the period in accordance with generally accepted accounting practice. However, special rules apply where the loan relationship is made between connected parties (defined below). The main areas affected where the parties are connected are as follows:

1. Ìý

   •ÌýÌýÌýÌý use of amortised costs basis — connected companies are prevented from using fair value accounting and instead must use the amortised cost basis in computing profits and losses from their loan relationships. This means that if the companies use fair value, or any other basis, in their accounts, they must make adjustments to those accounts figures for tax purposes, though there are some limited exceptions (see below)

2. Ìý

   •ÌýÌýÌýÌý impairment losses and debt releases — save for some limited exceptions, the creditor company may not claim relief for any impairment loss or releases which arise from its loan relationships with connected companies and, conversely, the debtor