The Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) (Amendment) Regulations 2015

Statutory Instruments

2015 No. 1963

Corporation Tax

The Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) (Amendment) Regulations 2015

Made

3rd December 2015

Laid before the House of Commons

7th December 2015

Coming into force

31st December 2015

The Treasury make the following Regulations in exercise of the powers conferred by sections 475(3) and 705(3) of the Corporation Tax Act 2009(1)

Citation, commencement and effect

1.—(1) These Regulations may be cited as the Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) (Amendment) Regulations 2015 and come into force on 31st December 2015.

(2) These Regulations have effect in relation to accounting periods beginning on or after 1st January 2016.

Amendments to the Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) Regulations 2005

2.—(1) The Loan Relationships and Derivative Contracts (Exchange Gains and Losses using Fair Value Accounting) Regulations 2005(2) are amended as follows.

(2) For regulation 2 substitute—

“Interpretation

2.   In these Regulations—

“CTA 2009” means the Corporation Tax Act 2009;

“CTA 2010” means the Corporation Tax Act 2010(3);

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

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

“loan relationship” has the same meaning as in section 302 CTA 2009;

“available-for-sale”, “carrying value”, “designated”, “fair value”, “fair value hedge” and “fair value through other comprehensive income” have the same meanings as they have for accounting purposes.”

(3) In regulation 3, for “sections 92 to 92E of the Finance Act 1993” substitute “Chapter 4 of Part 2 of CTA 2010”.

(4) In regulation 5—

(a) in paragraph (1)—

(i) in sub-paragraph (a), for “accounted for” substitute “measured”,

(ii) in sub-paragraph (b), for the words from “and” to the end substitute “and the carrying value of the hedged item is adjusted for changes in fair value attributable to the hedged risk”, and

(b) in paragraph (2)(a), for “profit and loss account or income statement” substitute “accounts”.

(5) In regulation 6, after “available-for-sale” insert “or fair value through other comprehensive income”.

(6) In regulation 7(2)(a), for “profit and loss account or income statement” substitute “accounts”.

(7) In regulation 9(5), for the words from “section” to the end substitute “sections 308(1) and 597(1) of CTA 2009”.

Mel Stride

George Hollingbery

Two of the Lords Commissioners of Her Majesty’s Treasury

3rd December 2015

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Loan Relationships and Derivative Contracts (Exchange Gains and Losses Using Fair Value Accounting) Regulations 2005 which set out the calculations for exchange gain and loss in loan relationships and derivative contracts where the assets and liabilities involved are accounted for using fair value accounting.

These regulations update statutory references and terms and substitutes a new interpretation regulation.

A Tax Information and Impact Note for the modernisation of the taxation of corporate debt and derivative contracts which covers this instrument was published at Summer Budget 2015 on 8th July 2015 and is available on the HMRC website at: www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. It remains an accurate summary of the impacts that apply to this instrument.

(1)

2009 c. 4

(2)

S.I. 2005/3422.

(3)

2010 c. 4.