Finance Act 1996

Transitional for debt contracts and options to which Chapter II of Part IV of the Finance Act 1994 is applied

25 (1) This paragraph applies in the case of any debt contract or option held by a company both immediately before and on 1st April 1996 if (apart from this Chapter)—

(a) the contract or option is an asset in the case of which the following condition is satisfied, that is to say, a gain accruing to the company on a disposal of that asset on 31st March 1996 would have fallen to be treated as a chargeable gain in relation to the company; or

(b) had there been a disposal of that asset on 31st March 1996, amounts with respect to it would have fallen to be brought into account for any accounting period beginning before 1st April 1996 in computing any profits or gains of the company from a trade carried on by it.

(2) Chapter II of Part IV of the [1994 c. 9.] Finance Act 1994 (provisions relating to certain financial instruments) shall have effect in relation to the debt contract or option as if references in that Chapter to 1st April 1996 were references to the beginning of the company’s first relevant accounting period.

(3) For the accounting period mentioned in sub-paragraph (2) above, section 158(2) to (5) of that Act (adjustments for changes of basis of accounting) shall have effect in relation to the debt contract or option as if—

(a) any reference to the new basis were a reference to the basis of accounting on which, as regards the contract or option, the company’s profit or loss for the accounting period so mentioned is calculated;

(b) any reference to being or not being included in amount A for a preceding accounting period were a reference to being or not being taken into account as receipts or increases in value in computing the company’s profits or losses for such a period; and

(c) any reference to being or not being included in amount B for a preceding accounting period were a reference to being or not being taken into account as deductions or reductions in value in computing the company’s profits or losses for such a period.

(4) Expressions used in this paragraph and in Chapter II of Part IV of the Finance Act 1994 have the same meanings in this paragraph as in that Chapter.