4(1)Regulations may provide that where an exchange gain or exchange loss accrues to a company as regards an existing asset or liability (or would so accrue apart from the regulations)—
(a)the amount of the gain or loss shall be deemed to be increased in accordance with prescribed rules,
(b)the amount of the gain or loss shall be deemed to be reduced in accordance with prescribed rules, or
(c)the gain or loss shall be deemed not to accrue.
(2)For the purposes of this paragraph—
(a)an exchange gain is an exchange gain of a trade or an exchange gain of part of a trade or a non-trading exchange gain;
(b)an exchange loss is an exchange loss of a trade or an exchange loss of part of a trade or a non-trading exchange loss.
(3)The regulations may be framed by reference to—
(a)exchange differences arising as regards the asset or liability at any time while the company actually holds or owes it (whether any such time falls before, on or after the company’s commencement day);
(b)such other factors as the Treasury think fit;
and for this purpose exchange differences are gains and losses attributable to fluctuations in currency exchange rates.
(4)The regulations may include provision designed to prevent provision under them being avoided by the replacement (or partial replacement) of assets or liabilities by other assets or liabilities.