Part II Income Tax, Corporation Tax and Capital Gains Tax
C1C2Chapter II Exchange Gains and Losses
Pt. II Chapter II to be construed with 1994 c. 31, Sch. 4 Pt. I para. 23 (19.9.1994) by 1994 c. 21, s. 21, Sch. 4 Pt. I para. 23(5); S.I. 1994/2189, art. 2, Sch.
Accrual of gains and losses
126 Accrual on currency contracts.
1
This section applies where a qualifying company enters into a contract (a currency contract) under which—
a
it becomes entitled to a right and subject to a duty to receive payment at a specified time of a specified amount of one currency (the first currency), and
b
it becomes entitled to a right and subject to a duty to pay in exchange and at the same time a specified amount of another currency (the second currency).
2
Subsection (3) below applies if there is a difference between—
a
the local currency equivalent, at the translation time with which an accrual period as regards the contract begins, of the amount of the first currency, and
b
the local currency equivalent, at the translation time with which the accrual period ends, of the amount of the first currency.
3
There is as regards the contract an exchange difference for the accrual period, and—
a
if the difference represents an increase over the period, an initial exchange gain of an amount equal to the difference accrues to the company as regards the contract for the period;
b
if the difference represents a decrease over the period, an initial exchange loss of an amount equal to the difference accrues to the company as regards the contract for the period.
4
Subsection (5) below applies if there is a difference between—
a
the local currency equivalent, at the translation time with which an accrual period as regards the contract begins, of the amount of the second currency, and
b
the local currency equivalent, at the translation time with which the accrual period ends, of the amount of the second currency.
5
There is as regards the contract an exchange difference for the accrual period, and—
a
if the difference represents a decrease over the period, an initial exchange gain of an amount equal to the difference accrues to the company as regards the contract for the period;
b
if the difference represents an increase over the period, an initial exchange loss of an amount equal to the difference accrues to the company as regards the contract for the period.
Pt. II Chapter II (ss. 125-170) modified (1.5.1995) by 1988 c. 1, Sch. 24 para. 19(2) (as inserted (1.5.1995) by 1995 c. 4, s. 133, Sch. 25 paras. 1, 6(5))
Pt. II Chapter II (ss. 125-170) restricted (31.7.1998) by 1988 c. 1, Sch. 28AA para. 8 (as inserted (31.7.1998) by 1998 c. 36, s. 108, Sch. 16 para. 8(1)(a))
Pt. II Chapter II (ss. 125-170): power to amend conferred (3.5.1994) by 1994 c. 9, s. 177(6)(b)
Pt. II Chapter II (ss. 125-170) excluded (3.5.1994) by 1994 c. 9, ss. 226(2), 230
Pt. II Chapter II (ss. 125-170) modified (19.9.1994) by 1994 c. 21, s. 21, Sch. 4 Pt. I para. 23(2) (with s. 40(7)); S.I. 1994/2189, art. 2, Sch.
Pt. II Chapter II (ss. 125-170) modified (23.3.1995) by S.I. 1994/3226, reg. 3(2)
Pt. II Chapter II (ss. 125-170) applied (23.3.1995) by S.I. 1994/3231, reg. 2(1)
Pt. II Chapter II (ss. 125-170) modified (29.4.1996) by 1996 c. 8, s. 105, Sch. 15 Pt. I para. 22(1) (with ss. 80-105)