SCHEDULES
SCHEDULE 15 Exchange gains and losses: alternative calculation
Matched liabilities
4
1
Regulations may provide that where—
a
as regards a liability an initial exchange gain or initial exchange loss accrues to a company for an accrual period under section 125 or 127 of this Act or would so accrue apart from regulations under this Schedule,
b
the liability falls within section 153(2)(a) of this Act,
c
the liability is eligible to be matched on any day in the accrual period with an asset held by the company, and such other conditions as may be prescribed are fulfilled, and
d
an election is made in accordance with the regulations to match the liability with the asset on any such day and the election has effect by virtue of the regulations,
the amount of the gain or loss shall be found in accordance with the alternative method of calculation.
2
Regulations may also provide that as regards any day in respect of which an election has effect the accrued amount shall be ascertained in accordance with prescribed rules.
3
The question whether a liability is eligible to be matched with an asset shall be determined in accordance with prescribed rules, and in particular regulations may include provision that—
a
only liabilities of a prescribed description are eligible to be matched with assets;
b
only assets of a prescribed description are eligible to be matched with liabilities;
c
liabilities of a prescribed description are eligible to be matched only with assets of a prescribed description.
4
Regulations may include provision that on any day—
a
a liability may be partially matched;
b
an asset may be partially matched;
c
one asset may be matched with two or more liabilities (wholly or partially);
d
one liability may be matched with two or more assets (wholly or partially).
5
Regulations may include provision that an election relating to an asset or assets shall be treated as made in relation to another asset or other assets (as where assets are replaced by others).
6
Regulations may include provision—
a
that an election may in prescribed circumstances have effect from a time before it is made;
b
that an election may be varied;
c
that an election may not be revoked;
d
that an election must be made by the company (subject to any provision under sub-paragraph (7) below).
7
Regulations may provide that where the company is a relevant controlled foreign company an election may be made by a United Kingdom resident company which has (or may be made jointly by United Kingdom resident companies which together have) a majority interest in the company; and—
a
a company is a relevant controlled foreign company if Chapter IV of Part XVII of the Taxes Act 1988 applies in relation to the accounting period of the company which constitutes the accrual period or in which the accrual period falls;
b
paragraph 4(3) of Schedule 24 to that Act (majority interest) applies for the purposes of this sub-paragraph.
8
Regulations may include provision—
a
that prescribed conditions shall be treated as fulfilled in prescribed circumstances (subject to any provision under paragraph (b) below);
b
that prescribed conditions shall be treated as not having been fulfilled if the inspector gives notification that he is not satisfied that they are fulfilled;
c
for an appeal from the inspector’s notification;
d
for a notification to be given to the company or companies making the election.
9
Regulations may be so framed that the accrued amount as regards a day depends on the extent to which a liability is matched.
10
Regulations may also provide as mentioned in one or more of the following paragraphs—
a
that a chargeable gain (or chargeable gains) shall be treated as accruing to a relevant person for the purposes of the M1Taxation of Chargeable Gains Act 1992;
b
that an allowable loss (or allowable losses) shall be treated as accruing to a relevant person for the purposes of that Act;
c
that the operation of that Act as regards a relevant person shall be otherwise adjusted in accordance with prescribed rules (whether the adjustment results in the incidence of tax on the person being greater or smaller).
11
For the purposes of sub-paragraph (10) above each of the following is a relevant person—
a
the company mentioned in sub-paragraph (1) above;
b
any person who has at any time acquired a matched asset (or part of a matched asset) since the company acquired it;
and a matched asset is an asset which has at any time been to any extent matched with a liability in pursuance of an election.
12
Regulations may make provision—
a
as to the occasion on which a chargeable gain or allowable loss mentioned in sub-paragraph (10) above is to be treated as accruing, as to the amount to be treated as the amount of the gain or loss, and as to other matters relating to the gain or loss;
b
as to the timing and extent of any adjustment mentioned in sub-paragraph (10)(c) above and as to other matters relating to the adjustment.