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

Fair value profits or losses arising from derivative contracts which are currency contractsU.K.

This adran has no associated Memorandwm Esboniadol

7.—[F1(1) For the purposes of [F2section 598(1)(a) of CTA 2009] there is prescribed in relation to a derivative contract whose underlying subject matter consists wholly of currency —

(a)all credits and debits representing the whole or part of a company’s fair value profit or loss in an accounting period if—

(i)there is a hedging relationship between the contract or part of the contract and a forecast transaction or a firm commitment (“the hedged item”) of the company; and

(ii)the hedged item is not one [F3for which fair value profits or losses are brought into account for the purposes of corporation tax];

(b)a company’s [F4section 614 or 615 credit or debit] in relation to such a contract, if for the accounting period in which the [F4section 614 or 615 credit or debit] falls to be brought into account sub-paragraph (a) applies to the contract; and

(c)a company’s prior period adjustment credit or debit in relation to such a contract, if for the accounting period in which the prior period adjustment credit or debit falls to be brought into account sub-paragraph (a) applies to the contract,

and the credits and debits mentioned in sub-paragraphs (a) to (c) together make up the regulation 7 fair value profits or losses.]

F5(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Where there is a hedging relationship between part of a currency contract and a hedged item, the part of the [F6regulation 7] fair value profit or loss that is prescribed is the part which bears to the whole the proportion which the value of that part of the contract which is in the hedging relationship bears to the value of the whole of the contract.

F7(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F8(5) Where regulation 4 [F9or 5ZA] applies to a contract to which this regulation applies, nothing in this regulation or regulation 10 is to require any [F10amount prescribed under regulation 4 or excluded under 5ZA] in relation to that contract to be brought into account.]

Textual Amendments

Commencement Information

I1Reg. 7 in force at 1.1.2005, see reg. 1(1)