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

Profits or losses arising from derivative contracts which are commodity contracts or debt contracts U.K.

8.— [F1 (1) For the purposes of [F2 section 598(1)(a) of CTA 2009] there is prescribed in relation to a commodity contract or debt contract—

(a) all credits and debits representing the whole or part of a company’s fair value profit or loss arising 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 [F3 for which fair value profits or losses are brought into account for the purposes of corporation tax];

(b) a company’s [F4 section 614 or 615 credit or debit], if for the accounting period in which the [F4 section 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, 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 8 fair value profits or losses.]

(2) In this regulation—

“a commodity contract” means a derivative contract whose underlying subject matter is commodities unless the contract is an interest rate contract within the meaning of regulation 9(4); and

“a debt contract” means a derivative contract whose underlying subject matter is an asset or liability representing a loan relationship unless the contract is an interest rate contract within the meaning of regulation 9(4).

(3) Where there is a hedging relationship between part of a commodity contract or part of a debt contract as the case may be and a hedged item, the part of the [F5 regulation 8] 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.

Textual Amendments

F1 Reg. 8(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), 9(2)

F2 Words in reg. 8(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(8)(b)

F3 Words in reg. 8(1)(a)(ii) substituted (29.12.2005 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 No. 2) Regulations 2005 (S.I. 2005/3374), regs. 1(1), 8

F4 Words in reg. 8(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(9)

F5 Words in reg. 8(3) 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), 9(3)

Commencement Information

I1 Reg. 8 in force at 1.1.2005, see reg. 1(1)