The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004

Interpretation U.K.

2.—(1) In these Regulations—

F1 ...

[F2 “CTA 2009” means the Corporation Tax Act 2009;

“CTA 2010 means the Corporation Tax Act 2010;]

[F3 “deferred shares” has the same meaning as in the Building Societies Act 1986;]

“derivative contract” has the same meaning as in [F4 Part 7 of CTA 2009];

[F5 “exchange gain or loss” has the same meaning as in [F6 section 475 of CTA 2009];]

F7 ...

[F8 “fair value profit or loss” means the profit or loss brought into account in relation to a derivative contract or an asset or liability representing a loan relationship where for the period in question—

(a)

the derivative contract or asset or liability representing a loan relationship is measured at fair value, or

(b)

the derivative contract or asset or liability representing a loan relationship is a hedged item in a designated fair value hedge and the carrying value of the hedged item is adjusted for changes in fair value attributable to the hedged risk;]

[F9 “hybrid capital instrument” has the meaning given by section 475C of CTA 2009;]

[F10 “loan relationship” has the same meaning as in [F11 section 302 of CTA 2009];]

[F10 “[F12 a section 614 or 615 credit or debit]” means the credit or debit to be brought into account in accordance with [F13 section 614 or 615 of CTA 2009];]

[F10 “a prior period adjustment credit or debit” means so much of any credit or debit as represents a prior period adjustment taken into account by virtue of [F14 section 597(1)(b) of CTA 2009] as a result of a change of accounting basis;]

F15 ...

“underlying subject matter” has the same meaning as in [F16 Part 7 of CTA 2009].

(2) In these Regulations—

“for accounting purposes” means for the purposes of accounts drawn up in accordance with generally accepted accounting practice;

“generally accepted accounting practice” has the meaning given in [F17 section 1127 of CTA 2010]; and

“amortised cost”[F18 , consolidated accounts], “designated”, “effective hedge”, “effective interest method”, [F19 “fair value hedge”,] “firm commitment”, “forecast transaction”, “foreign operation” [F20 , fair value, items of other comprehensive income] and “net investment in a foreign operation” have the same meaning as for accounting purposes.

(3) In these Regulations any reference to an asset which is a ship or aircraft includes a reference to a contract—

(a) to which section 67 of the Capital Allowances Act 2001(1) applies; and

(b) which relates to plant or machinery which is a ship or aircraft.

[F21 (3A) For the purposes of these Regulations, a liability representing a loan relationship or a derivative contract is treated as matched with shares, ships or aircraft from the date that, and to the extent that, either condition 1 or 2 of regulation 3(3) or 4(3) are satisfied.]

(4) In these Regulations—

(a) any reference to a hedging instrument includes a reference to part of an instrument; and

(b) any reference to a hedged item includes a reference to part of a hedged item.

(5) For the purposes of these Regulations, a company has a hedging relationship between a derivative contract or a liability representing a loan relationship on the one hand (“the hedging instrument”) and an asset, liability, receipt [F22 , expense, forecast transaction or firm commitment] on the other (“the hedged item”) if and to the extent that—

(a) the hedging instrument and the hedged item are designated by the company as a hedge; or

(b) in any other case the hedging instrument is intended to act as a hedge of—

(i) the exposure to changes in fair value of a hedged item which is a recognised asset or liability or an unrecognised firm commitment or an identified portion of such an asset, liability or commitment that is attributable to a particular risk and could affect profit or loss of the company;

(ii) the exposure to variability in cash flows that is attributable to a particular risk associated with a hedged item that is a recognised asset or liability or a forecast transaction and could affect profit or loss of the company; or

(iii) a net investment in a foreign operation of the company.

[F23 (6) For the purposes of regulations 3 to 5, where an asset referred to is shares in a company, the asset comprises all the shares held in that company whenever acquired.]

Textual Amendments

F1 Words in reg. 2(1) omitted (1.1.2014 with effect in accordance with reg. 1(2)(3) of the amending S.I.) by virtue of The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209), regs. 1(1), 10(2)(a)

F2 Words in reg. 2(1) inserted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(a)

F3 Words in reg. 2(1) inserted (21.11.2013 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2013 (S.I. 2013/2781), regs. 1(1), 2(2)

F4 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(b)

F5 Words in reg. 2(1) substituted (11.8.2005 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2005 (S.I. 2005/2012), regs. 1(1), 3(a)

F6 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(c)

F7 Words in reg. 2(1) omitted (31.12.2015 with effect in accordance with reg. 1(2) of the amending S.I.) by virtue of The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2015 (S.I. 2015/1961), regs. 1(1), 3(a)

F8 Words in reg. 2(1) substituted (31.12.2015 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2015 (S.I. 2015/1961), regs. 1(1), 3(b)

F9 Words in reg. 2(1) inserted (with effect in accordance with Sch. 20 para. 10(b) of the amending Act) by Finance Act 2019 (c. 1), Sch. 20 para. 9(2)(a)

F10 Words in reg. 2(1) inserted (11.8.2005 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2005 (S.I. 2005/2012), regs. 1(1), 3(b)

F11 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(e)

F12 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(f)(i)

F13 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(f)(ii)

F14 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(g)

F15 Words in reg. 2(1) omitted (with effect in accordance with Sch. 20 para. 10(b) of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 20 para. 9(2)(b)

F16 Words in reg. 2(1) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(1)(h)

F17 Words in reg. 2(2) substituted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(2)(a)

F18 Words in reg. 2(2) inserted (27.12.2007 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment No. 2) Regulations 2007 (S.I. 2007/3431), regs. 1(1), 2(2)(a)

F19 Words in reg. 2(2) inserted (31.12.2014) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 (S.I. 2014/3188), regs. 1(1), 8(2)(b)

F20 Words in reg. 2(2) inserted (31.12.2015 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2015 (S.I. 2015/1961), regs. 1(1), 3(c)

F21 Reg. 2(3A) inserted (6.12.2011 at 11.45 a.m. with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment No. 2) Regulations 2011 (S.I. 2011/2912), regs. 1(1), 3

F22 Words in reg. 2(5) substituted (1.4.2022 with effect in accordance with reg. 1(2) of the amending S.I.) by The Disregard and Bringing into Account of Profit and Losses on Derivative Contracts Hedging Acquisitions and Disposals of Shares Regulations 2022 (S.I. 2022/239), regs. 1(1), 2(2)

F23 Reg. 2(6) inserted (27.12.2007 with effect in accordance with reg. 1(2) of the amending S.I.) by The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment No. 2) Regulations 2007 (S.I. 2007/3431), regs. 1(1), 2(2)(b)

Modifications etc. (not altering text)

C1 Reg. 2(5) applied (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by 2010 c. 8, s. 421(3) (as inserted by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1 (with Sch. 5 paras. 27, 32-34))

Commencement Information

I1 Reg. 2 in force at 1.1.2005, see reg. 1(1)

(1)

2001 c. 2.