Corporation Tax Act 2009

649 Meaning of certain expressions in section 648 U.K.

(1) This section applies for the purposes of section 648.

(2) “Exactly tracking contract” means a contract where the amount which is to be paid to discharge the rights and liabilities which fall to be treated as comprised in the contract is equal to the amount found by applying R% to C, where—

• R% is the percentage change (if any) over the relevant period in—

  • (a) the value of the assets which are the underlying subject matter of the contract, or

  • (b) any index of the value of those assets, and

• C is the amount falling to be regarded in accordance with generally accepted accounting practice as the cost of the asset representing the creditor relationship mentioned in section 648(2) on the date when that asset came into existence.

(3) In subsection (2) “the relevant period” means—

(a) the period between—

(i) the date when the asset representing that creditor relationship came into existence, and

(ii) the date when the debtor relationship corresponding to that creditor relationship comes to an end, or

(b) any other period in which almost all of that period falls, and which differs from that period only for purposes connected with giving effect to a valuation in relation to rights or liabilities under that asset.

(4) “Qualifying ordinary shares” means shares in a company which are all or part of the issued share capital (however described) of the company, other than—

(a) capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company, or

(b) capital the holders of which have no right to a dividend of any description nor any other right to share in the profits of the company.